Public Bill Committee

[Mr. Joe Benton in the Chair]

Clause 172

Overview

Amendment proposed [this day]: No. 345, in clause 172, page 67, line 29, leave out ‘compliance’ and insert ‘performance’.—[Mr. Raynsford.]

Question again proposed, That the amendment be made.

Joe Benton: I remind the Committee that with this we are discussing the following: amendment No. 44, in clause 173, page 68, line 3, after ‘may’ insert
‘, in accordance with subsection (2) and subject to subsection (3),’.
Amendment No. 41, in clause 173, page 68, line 3, leave out ‘as’ and insert
‘for the purpose of protecting investment in social housing or protecting the interests of tenants and residents in social housing. These standards may refer’
Amendment No. 45, in clause 173, page 68, line 7, leave out from ‘may’ to the end of line 8 and insert ‘cover-’
Government amendment No. 229.
Amendment No. 42, in clause 173, page 68, leave out lines 22 and 23.
Amendment No. 43, in clause 173, page 68, line 24, at end insert—
‘(3) In setting standards the regulator shall have regard (among other matters) to landlords’ contribution to the environmental, social and economic well-being of the areas in which their property is situated.’.
Amendment No. 47, in clause 174, page 68, line 27, at end insert—
‘(2) In setting standards, the regulator shall have regard (among other matters) to providers’ contribution to the environmental, social and economic well-being of the areas in which their property is situated.’.

Iain Wright: It is good to see you in the Chair, Mr. Benton. It seems like a long time since you were last presiding over us.
My hon. Friend the Member for Edmonton, who is not in his place at the moment, has mentioned the independence of the Office for National Statistics. The position is clear. It is not for Departments to approach the ONS directly as part of their development of Government policy, which would risk compromising the independence of the ONS. All discussions on such matters are conducted through Her Majesty’s Treasury, which has advised us that the changes proposed under the Bill are not salient to the classification decision. It is not therefore appropriate to consult the ONS on the changes. I suggest to the Committee that that is the proper process and, on that basis, I am clear that the proposed changes do not amount to direct management control, which has been suggested, and that the Bill does not change the classification process.

Nick Raynsford: Reference has been made to a number of experts who have commented on the issue. Julian Ashby, who gave evidence on 13 December, said:
“When working on the Cave review...we sought advice about the classification...The aspect of the Bill that gives me concern relates to clause 177...It seems to undermine the purpose of having an independent regulator if the Secretary of State then determines the detail of the standards that were for the regulator to set.”——[Official Report, Housing and Regeneration Public Bill Committee, 13 December 2007; c. 87, Q140.]
I could go on, because he gave clear evidence. When he was on the Cave review, he took evidence from the Treasury, but he expressed concern that the Bill, as drafted, did not achieve the objective that the Cave review felt was the right way forward. Does my hon. Friend consider that there is really ground for worry and that, by some means or another, the view of the ONS should be sought before the situation becomes a fait accompli with disastrous consequences?

Iain Wright: I agree with my right hon. Friend that it is important to make sure that we get matters right, and I am satisfied that we have followed the due process in that regard. I hope that he will intervene, if I have matters wrong, but at the evidence session Julian Ashby said something about the Secretary of State determining the detail of standards—I hope that I understood him correctly, because I do not have a copy of the report in front of me. I suggest that that is not even how the current regime that we propose stands. The Secretary of State will not direct in detail the nature of standards, and it will be a broad-brush approach. The regulator will undertake that direction, but we do not anticipate the Secretary of State taking part in direct detail.

Nick Raynsford: Julian Ashby is recorded as saying:
“The aspect of the Bill that gives me concern relates to clause 177, in which the Secretary of State will have the power to direct the regulator not simply to set standards in particular areas but to set the content of those standards. It seems to undermine the purpose of having an independent regulator if the Secretary of State then determines the detail of the standards that were for the regulator to set.”
He goes on:
“The overall assessment of whether something is a public body is made on a rounded judgment. It is not a single issue matter, but the more the Government have the power to intervene directly, the greater is the risk of classification as a public body.”——[Official Report, Housing and Regeneration Public Bill Committee, 13 December 2007; c. 87-88, Q140.]
The experience of foundation hospitals is such that we should be very wary indeed in respect of classification.

Iain Wright: I agree that we should be absolutely certain. My firm feeling is that the Bill does not represent my right hon. Friend’s interpretation of it. However, I am aware of the worry about such matters. I hope that he agrees that the right approach is to work in consultation with stakeholders and that he and others will play a large role in ensuring that we get the matter absolutely right. I do not agree with the concerns about direct management control. However, I hope that we can move forward on particular areas such as directions, guidance and standards in which the Secretary of State is interested.
Amendment No. 42 proposes to omit clause 173(2)(k), which permits the regulator to set standards on
“landlords’ contribution to the environmental, social and economic well-being of the areas in which their property is situated”.
That was mentioned by my right hon. Friend this morning, and it has been reiterated several times during the Bill’s deliberations. There is concern that the regulator may be able to set and enforce standards on non-social housing issues, including local voluntary activities—we certainly do not want to discourage such activities.
As I explained in the debate on clause 86, while subsection (2)(k) would allow the regulator to regulate such activities, if they are linked to social housing, it does not necessarily follow that that power will be used. The regulator does not have to use that power, and there might be more appropriate ways of achieving the regulator’s sixth objective. Nevertheless, we believe that the regulator should have power to regulate registered providers’ wider community activities. Martin Cave recommended that all parts of the domain should have a statutory duty to co-operate with the convening and place-shaping role of local authorities. That obligation will be stronger in areas in which a provider has a significant number of homes. I share my right hon. Friend’s concern that any requirements imposed on registered providers in relation to place shaping should not be unduly or disproportionately onerous. That is why we rejected imposing a direct statutory duty, as the Cave review suggested. It would be difficult adequately to express in the Bill the idea that the strength of the obligation should vary depending on the extent of the landlords’ activities in an area.
Subsection (2)(k) was included to ensure that registered social landlords co-operate with local authorities in local place shaping, but in a reasonable and proportionate manner to their holdings in an area. By giving the regulator the power to set standards, acting in accordance with its objectives to regulate proportionately and in a way that minimises the burden of regulation, I believe that we are carrying forward the spirit of Cave’s recommendations, but in a manner that is less onerous and more flexible and practical.
My right hon. Friend the Member for Greenwich and Woolwich also expressed concern about what a standard under clause 173(2)(k) might require. However, that is not for me to say, because such standards will be set by the regulator. On that basis, I hope that I have reassured him on a whole range of things, and I hope that I have made it clear that the Government intend to move forward on the regulator, the setting of standards and the role of the Secretary of State. Therefore, I ask my right hon. Friend to withdraw the amendment.
Government amendment No. 229 is our only amendment to clause 173. It is a technical amendment that will insert
“policy and procedures required by section 218A of the Housing Act 1996 in connection with”
before “anti-social behaviour” in subsection (2)(j). The aim is to clarify that standards on antisocial behaviour should only be in respect of existing duties and powers of landlords under the 1996 Act and should not be a wider, open-ended power. In that way, I hope that we are mitigating the concerns and risks that stakeholders have expressed with regard to the antisocial behaviour standard as well. That is the approach that I aim to take forward as the Bill progress through all its stages.
I hope that I have explained my policy and position in detail and that I have reassured hon. Members.

George Young: I want briefly to respond to what the Minister said before he moved on to the Government amendment. I agree with him that this is one of the most important issues in the Bill, as the right hon. Member for Greenwich and Woolwich has also said. It is the obverse of the problem with SociÃ(c)tÃ(c) GÃ(c)nÃ(c)rale, which thought that there was something on the balance sheet and then discovered that it was not. With this, the Government thought that something was off the balance sheet, but they may discover that it is inadvertently on it. That is the other side of the coin.
Before we rose for lunch, the Minister said that he would look at the issue again and engage opinions on it before Third Reading. That was helpful, but I am worried that he is relying on meetings with Treasury officials. Treasury officials are not omniscient. They were wrong about foundation hospitals—they said that they would be off balance sheet, but they turned out to be on balance sheet. There is a risk in relying on Treasury opinion. I am sorry to press the Minister, but I remind him what the Chief Secretary to the Treasury, the former Minister for Housing, said about the ONS:
“I have asked about potential arrangements for taking advice from the ONS in advance of the Committee stage, as opposed to the normal approach in which the ONS gets asked afterwards. It would be helpful to have its advice in advance, and I have asked for it.”——[Official Report, Housing and Regeneration Public Bill Committee, 13 December 2007; c. 142, Q233.]
In other words, she asked the ONS for its advice. However, the Minister has not made it clear what the advice might have been.
The Minister said—I think that I understood him—that it would be improper to have a dialogue with the ONS, because it is independent. I do not follow that line of argument. Yes, it is independent, but what would be wrong with the Government saying, “We must get this definition right. This is what is in the Bill. Will you tell us whether we run the risk of having the debt classified as public sector borrowing?” What would be improper about such a dialogue, which seems entirely sensible? Indeed, the Chief Secretary to the Treasury thought it was sensible on 12 December. Now, there will be no direct dialogue with the ONS and the matter must go through the Treasury, which will not put the question to the ONS directly.
I want to press the Minister about the alleged impropriety of talking in advance to the ONS about the likely definition of housing association borrowings. I have listened to what he has said about the measure simply bringing the social housing regulator into line with other regulators. I do not know whether in his nightmare weekend he read the Centre for Economics and Business Research report that compared this regulator with all the others. The powers in this Bill go way beyond those of other regulators. For example, as we discovered a few moments ago, appeals against this regulator can be made only to the High Court, whereas other regulators have an appeal body. The Charities Act 2006 states that charity commissioners
“shall not be subject to the direction or control of any Minister of the Crown”.
The rail regulator, despite much pressure to the contrary, is only required “to have regard” to Government guidance. On Ofcom, there are a few occasions where the Secretary of State can make directions, but those are in the interests of national security, relations with a foreign Government, for securing compliance with international obligations or in the interests of public safety or public health. Those definitions are much narrower than the definitions in the Bill.
Having listened to the debate, my anxieties have not been allayed. The Government could go further than they have so far in getting the necessary assurances from the ONS that the debt likely to be incurred will not be scored as public sector debt. As a responsible Minister, he owes it to the Committee to come back on Report with better assurances than he has given today.

Iain Wright: The matter is important, and I appreciate the way in which the right hon. Gentleman has set out his concerns. As I have said, I am satisfied that we have followed due process. I appreciate that the provision is a very important part of the Bill, and we want to get it right. There are concerns, and I have pledged to the Committee that I will go away and re-examine the matter to reassure the Committee and wider stakeholders that management control—direct micro-management by the Secretary of State—will not be enacted as a result of the Bill’s provisions. I recognise the point, but I want to reaffirm that I am satisfied that we have followed due process in liaising with the Treasury and discussing its interpretation of the issue. I understand the point about going directly to the ONS, but I am clear that what we have done will not comprise the independence of the ONS, notwithstanding what has been said about the matter.

Andrew Love: I apologise to the Minister for not being present when he answered the question that I asked immediately before we broke for lunch. To follow up the comments made by the right hon. Member for North-West Hampshire, this area is incredibly complex. I understand what the Minister said about the propriety of speaking about independent organisations, but I shall choose just one particular complexity in relation to Network Rail. There has been constant discussion about whether Network Rail is in or out and whether it has public sector debt, which gives a flavour of the complexity. Before the Bill is enacted, it is important that reassurance is provided that what the Government intend to do with the Bill will actually be carried through and will hold firm into the future.

Iain Wright: That is exactly what we all want. I am disappointed that my hon. Friend was not here, because my answer was, if I may say so, spectacular. It sorted out all the problems—I wish. My hon. Friend has made an important point about Network Rail, as has the right hon. Member for North-West Hampshire on foundation trusts.
When I was having my nightmare weekend reading about the Committee from 2003, I noticed a comment by the right hon. Member for North-West Hampshire on foundation trusts. He said that
“The Under-Secretary can provide no precedent”—
the Under-Secretary was my right hon. Friend the Secretary of State for Communities and Local Government—
“for the corporate vehicle that is envisaged in the Bill.”——[Official Report, Health and Social Care (Community Health and Standards) Public Bill Committee, 13 May 2003; c. 48.]
I suggest to the right hon. Gentleman that we are some way away from that. Foundation trusts were a new platform for the delivery and provision of health care, and we are in no way near that. I hope that that provides a degree of reassurance. In that Committee, the right hon. Gentleman also suggested to the then Under-Secretary that he wished to see her rapidly promoted to Minister of State, Office of the Deputy Prime Minister, but she has done one better than that, because she is now a Secretary of State.
The point about foundation trusts is important, and I hope that the right hon. Gentleman is reassured that we have not gone as far as that on innovative new vehicles, because RSLs are essentially the same as registered providers. We cannot get that important matter wrong. I shall go away and look at it to ensure that I can provide greater reassurance on Report.

Nick Raynsford: We have had a good debate and aired a number of extremely important issues. I do not think that any of us should underestimate the significance of what we have been talking about, because if the classification issue is not got right, the whole strategy for delivering an expanded housing programme and for facilitating investment through housing associations is destroyed. Therefore, I am pleased that the Minister has accepted that there is a need for further reflection and that he has welcomed the participation of the stakeholders in that process. I shall be only too happy to continue to play a role in that, if he would welcome it.
We need to consider the structure of this part of the Bill, and the Minister has indicated that that will be examined. We need to be absolutely satisfied that the way forward does not have the malign consequences that have been pointed out by the right hon. Member for North-West Hampshire, my hon. Friend the Member for Edmonton and me.
This is the moment for me to seek leave to withdraw the amendment, and I shall do so. I will add the slightly mischievous comment that given the Minister’s concern that the consultation with the ONS should be done only through the Treasury, he is extraordinarily well placed, in that the Chief Secretary to the Treasury, the former Minister for Housing, can pursue her inquiries in her new role without any breach of propriety. I hope that the clarification of the position on the ONS proceeds and that we will have greater certainty when we return to the matter.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nick Raynsford: I beg to move amendment No. 346, in clause 172, page 67, line 30, leave out from ‘regulator’ to ‘registered’ in line 31 and insert
‘certain powers relating to the governing instruments of’.

Joe Benton: With this it will be convenient to discuss the following:
Amendment No. 350, in clause 188, page 72, line 31, leave out from ‘office’ to end of line 36 and insert ‘or,
(c) rules, except as provided in subsection (3).
(3) The regulator’s prior written consent is required to any change in the society’s objects, or any change in the society’s rules directing the application of its property in the event of its dissolution, or any change providing authorisation for any benefit to be obtained by directors or members of the society or persons connected with them.
(4) Any change requiring the regulator’s consent shall be invalid unless such consent has been obtained.
(5) In respect of changes requiring the regulator’s consent, the requirement in section 10(1) of the Industrial and Provident Societies Act 1965 (c. 12) (sending copies of amendment of rules to FSA) is satisfied only if the copies are accompanied by a copy of the regulator’s consent.’.
Amendment No. 351, in clause 190, page 73, line 10, leave out from ‘office’ to end of line 15 and insert ‘or,
(c) memorandum and articles of association, except as provided in subsection (3).
(3) The regulator’s prior written consent is required to any change in the objects clause in the company’s memorandum of association, or any change in the company’s memorandum or articles of association directing the application of its property in the event of its dissolution, or any change in the company’s memorandum or articles of association providing authorisation for any benefit to be obtained by directors or members of the company or persons connected with them.
(4) Any change requiring the regulator’s consent shall be invalid unless such consent has been obtained.
(5) In respect of changes requiring the regulator’s consent, the requirement in section 30 of the Companies Act 2006 (c. 46) (sending copy of resolution to registrar) is satisfied only if the copy is accompanied by a copy of the regulator’s consent.’.
Clause 187 stand part.

Nick Raynsford: I will not detain the Committee, because the amendments are broadly similar to those that we have debated. Amendment No. 346 would amend clause 172(c), which gives the regulator a
“degree of control over the governance of non-profit registered providers”,
to give a slightly more felicitous wording, so that the regulator would have
“certain powers relating to the governing instruments of”
registered providers. Obviously, the purpose is to safeguard against a possible interpretation of the “degree of control” to be exercised over RSLs, which might lead to their being classified as public sector bodies. Those arguments have been rehearsed, and there is no point repeating them.
Amendments Nos. 350 and 351 are of a different nature. I am puzzled about the grouping, but that is not for me to question—it is your decision, Mr. Benton. The amendments concern the smaller issue of the consent that is required by RSLs who seek to change the rules. Under the Bill, the regulator must give prior consent for any changes in the rules. The amendments would limit that consent to important changes in the organisation’s objectives, changes in the rules that apply to the use of property in the event of an organisation going out of existence, or any changes
“providing authorisation for any benefit to be obtained by directors or members”
of the organisation
“or persons connected with them”.
Those would be proper safeguards. Prior consent for such changes from the regulator is appropriate, and more technical or trivial changes really ought not to require prior consent from the regulator. If we are seeking to act on the conclusions of the Elton review, which looked at the degree to which housing associations are subject to over-heavy regulation, this is a matter where there is scope for improvement.
I hope that my hon. Friend the Minister can at least reassure me on the objectives of the amendments, even if he will resist the precise wording. It is in all our interests that there is an effective form of regulation that does not involve over-detailed or over-intrusive examination of relatively trivial matters.

Andrew George: Will the right hon. Gentleman comment on the need to ensure cross-compliance between the regulations on housing associations proposed under the Bill, and the Charities Act 2006, which, I understand, contains similar wording to the amendments? Cross-compliance would surely add to the robustness sought by the amendments.

Nick Raynsford: I am grateful to the hon. Gentleman for raising that germane point. We should ensure consistency between the different regulatory regimes that apply in general to housing associations, and specifically to those that are charities, and other charities.
Those are the purposes of the amendments, and I hope that my hon. Friend the Minister will give them sympathetic consideration.

Iain Wright: I have a lot of sympathy with the motivation behind amendments Nos. 350 and 351. As my right hon. Friend has rightly pointed out, they identify the key areas of interest for the regulator in a provider’s constitution. However, I hope that my right hon. Friend accepts that I cannot accept the amendments without first considering a detailed analysis of the risks of removing the existing controls. I pledge to do that, and I hope to update him on Report.
On amendment No. 346, I agree that the regulator should not and will not have general control over a registered provider’s day-to-day management or activities. I suggest that that will remain the responsibility of registered providers’ governing boards, which is how it should be. Clauses 187 to 190 do not apply to profit-making bodies, and nor should they. The main aim of requiring the regulator’s consent to a non-profit body’s change of constitution is to ensure that it retains its non-profit status and housing focus and cannot realise and distribute publicly funded social housing assets. As my right hon. Friend is aware, we are introducing amendments to strengthen that system, and I suggest that that is irrelevant to profit-making bodies.
As I have said, I have much sympathy with amendments Nos. 350 and 351. I would like to carry out a detailed assessment of the potential impacts and risks, but I am amenable and willing to consider the matter further. On that basis, I hope that my right hon. Friend will withdraw the amendment.

Nick Raynsford: The Minister has given a fair response, and I accept his undertaking to have a further look at the matter.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 172 ordered to stand part of the Bill.

Clause 173

Provision of social housing

Amendment made: No. 229, in clause 173, page 68, line 21, before ‘anti-social behaviour’ insert
‘policies and procedures required by section 218A of the Housing Act 1996 (c. 52) in connection with’.—[Mr. Wright.]

Nick Raynsford: I beg to move amendment No. 46, in clause 173, page 68, line 24, at end insert—
‘(3) No standard may be set that would require a registered provider to act in any way that is inconsistent with—
(a) its rules, memorandum and articles of association, or equivalent governing instrument;
(b) any legal or contractual commitment, including any loan covenant, for the time being binding upon it; or
(c) or if applicable, its status as a charity (whether or not it is registered as such).’.

Joe Benton: With this it will be convenient to discuss amendment No. 48, in clause 174, page 68, line 27, at end insert—
‘(2) No standard may be set that would require a registered provider to act in any way that is inconistent with—
(a) its rules, memorandum and articles of association, or equivalent governing instrument;
(b) any legal or contractual commitment, including any loan covenant, for the time being binding upon it; or
(c) if applicable, its status as a charity (whether or not registered as such).’.

Nick Raynsford: This is another take on the classification of housing associations, but it also raises an important question about their rightful independence and their ability to manage themselves. The amendments would avoid a conflict between the standards set by the regulator and the rules, memorandums and articles of association or equivalent governing instruments of the registered bodies.
The amendments provide that:
“No standard may be set that would require a registered provider to act in any way that is inconsistent with”
its rules and articles. That is a sound principle for regulation, and it would provide a safeguard in relation to the classification issue, which we have discussed already—I do not intend to repeat the details, because the arguments have been well rehearsed. I shall say no more than that the amendments would provide one further safeguard. I expect the Minister to say that he will consider the amendments along with the other issues identified as part of the general appraisal of the structure of this part of the Bill. If he can provide that undertaking, I shall happily seek leave to withdraw the amendment.

Iain Wright: In order to make progress, I am tempted just to say yes and sit down, but I cannot do that. I intend to consider the matter further, but I would prefer to provide a slightly longer answer. As with most things that my right hon. Friend does, I have much sympathy with amendment No. 46. As he has said, it is designed to maintain the independence of RSLs. However, I do not believe that the amendments are necessary, because I am satisfied that the Bill preserves that independence. Having said that, I shall reconsider the whole matter.
I have several concerns about how the proposal would work in practice. I am concerned that providers would exploit it in order to evade standards. Furthermore, constitutions cannot be changed easily. Under clauses 188 and 190, non-profit providers will require the regulator’s consent to such changes, or the Charity Commission’s consent if the provider is a charity. Given that profit-making providers can change their constitutions without the regulator’s consent, such a provider could, in theory, change its constitution so that a particularly disliked standard did not apply. Without first checking every provider’s constitution, it would be impossible for the regulator to be absolutely certain that its standards were not in conflict.
Contracts can easily be entered into by providers. The regulator cannot restrict such transactions, save during a moratorium when a provider is insolvent or, under Government new clauses 55 and 56—should they be accepted—during or following a public inquiry into a provider’s affairs to protect the provider’s tenants or assets. I would be concerned about allowing providers such an easy means of evasion.
My second concern is that such opt-outs might lead to a multi-speed regulatory system in which every provider has a different set of standards. Our aim is to have a clear set of standards that deliver equivalent outcomes to tenants, regardless of the identity of their landlord, notwithstanding our debates on a whole range of issues in this regard. I suggest that the amendment would make that harder to achieve.
Thirdly, and most vividly, the amendments would make it unclear who should judge whether a standard violates a constitution, contract or charitable status. If it is not the regulator or provider, the issue might end up in the courts, which would be expensive and time-consuming. We do not want this issue to dominate the regulator’s time or to delay the standard-setting process if that can be avoided. As regards charitable status, we would have to be absolutely sure what it meant, especially with unregulated charities.
Amendment No. 48 does the same as amendment No. 46 but in relation to clause 174, and some of the same issues apply. I recognise that the regulator needs to handle governance according to the nature of the organisation, and that it already has slightly separate powers in relation to charitable housing associations. Whatever standards it sets in considering what enforcement action, if any, to take in the event of a provider’s non-compliance, the regulator will have discretion. It will have to act within its fundamental objectives, including, as I am fond of saying, minimising interference and acting proportionately within its compliance code.
The new enforcement powers in chapter 7 will give providers an opportunity to make representations before the regulator acts, and to offer undertakings. If a registered provider has genuine, good reasons for not complying with a particular standard—for example, if its constitution does not permit it to carry out a particular activity—I imagine that the regulator would act sensibly.

Andrew George: The Minister has painted the social housing providers that would be regulated as bodies that would seek not to co-operate with the guidance and regulations set down by the new regulator. Will he describe the problem for which this regulation is the solution? To what extent do RSLs perpetually seek to avoid their responsibilities? From the comments that he has just made, one would assume that they are not co-operative and perpetually seek to avoid their responsibilities.

Iain Wright: I do not want to paint a bleak picture full of dark foreboding. In my experience, the RSL sector, on the whole, steps up to the plate a great deal to ensure that tenants are well provided for. However, I am sure that the hon. Gentleman sat, as I did, through Second Reading. My hon. Friends the Members for West Ham and for Islington, South and Finsbury (Emily Thornberry) have talked about rat-infested estates in which tenants are being let down. The whole point of having a regulatory regime is to ensure that we raise standards. That is the purpose of the measures and I hope that the hon. Gentleman agrees with that.

Lyn Brown: I rise only to say that in my inbox today I had yet another poor response from a housing association that has not responded to two letters of mine sent three months apart. I am really looking forward to the regulation kicking in pronto.

Iain Wright: I am very grateful to my hon. Friend. In response to the hon. Member for St. Ives, I would say that that is his answer.

Nick Raynsford: The Minister’s case against accepting the amendments is twofold. First, there might a temptation for some providers—possibly private sector providers—to abuse the powers in order to limit regulatory burdens. Secondly, it could result in excessive complications and possibly litigation if the regulator were to set standards that were, in any respect, in conflict with the articles of any legal registered body. There are answers to both those points. The whole purpose of the regulation should not be driven by the tail, but by the dog. As the hon. Member for St. Ives pointed out, the vast majority of registered social landlords are only too happy to have articles and memorandums that are consistent with the standards that are likely to be set. Therefore, there is a sense of an argument being used on the basis of a minority, rather than majority. Nevertheless, I accept that it is a concern that the Minister raises.
On the second issue, frankly, the regulator will take legal advice on any standards that are set. The regulator will be satisfied if the standards are compatible with the aims, objectives, articles and memorandums of the majority of bodies that are registered with it. It would be very foolish for them to be otherwise, as that would inevitably invite litigation. I do not see that as a really serious obstacle, particularly if there are models, rules and articles that will be adopted by the overwhelming majority of bodies that seek registration. They will probably seek advice from the same legal experts who will be advising the regulator. One thing that we can be quite certain about is that the lawyers will do well out of this process. I am not sure that I entirely go along with the Minister’s arguments, but I accept, with a degree of sympathy, his good faith in wanting to look at the matter further. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause, as amended, stand part of the Bill.

George Young: I want to press the Minister on subsection (2), which looks remarkably like a list to me. It sets out the standards with which registered providers have to comply. Subsection (2)(e) is on the levels of rent. I would have said that the level of rent is what one pays for a standard, rather than its being a standard itself. I am concerned that some very sensitive decisions about rent levels will be subcontracted to the regulator. I want to press the Minister on the freedom that the regulator might have. Rent levels are enormously sensitive economic and political indicators. They impact on inflation, on public expenditure through housing benefit and on the number of new homes that are going to be built, because that affects the income of a housing association.
I wonder whether the Minister is going to leave to the regulator this total discretion on rent levels, including provision for minimum or maximum levels, or whether the Secretary of State will give a direction on this under clause 177. When local authority homes come within the embrace of the regulator, will he really set the level of local authority rents, as well as housing association rents? The Minister looks puzzled, and I am waiting to hear what the answer might be. If the social housing regulator is going to set the level of rents for local authorities, that is a serious move in respect of the autonomy of local authorities and the consequences on the housing revenue account. Also, such a move might have consequences for any attempts to harmonise rents if they did not come within the ambit of the social housing regulator. If he is going to have this level of discretion under subsection (2)(e), do we have any idea what principles he will follow? Will he move towards market rents, or towards cost rents? Will he use the existing rents plus the retail price index? This is an enormous discretion to give him. I suspect that the Minister may say that under clause 177, the Secretary of State will constrain that discretion for the reasons that I have given. If so, when we come to clause 177, perhaps the Minister might outline what parameters he will put around subsection (2)(e), so that housing association tenants know roughly what sort of regime will be introduced by the social housing regulator.

Andrew Slaughter: I entirely agree with the right hon. Member for North-West Hampshire about the wide ambit of the provisions under subsection (2), even though they may be qualified by intervention and direction, and so forth. In my view, it is right to keep that ambit wide—the assumption must be that it will be used in the exception rather than the rule. However, a problem has been articulated by a number of members of the Committee, and when social landlords are not fulfilling the function that I am sure most of us would wish to see them fulfil, tinkering at the edges will not be an acceptable provision.
When I spoke on Second Reading I alluded to an example of getting the balance right in a particular area in terms of housing supply. It may be a question not simply of the number of units but the type of units—mixed tenure estates, for example—and the emphasis being on renting rather than shared or intermediate ownership. That is a particular problem, as I have said, with both local authority and RSL provision. On Second Reading, I was highly critical of a number of RSLs operating in west London. I received a comment from one of the leading RSLs that I criticised—Notting Hill housing trust—and this is an example of why it is necessary to have this stick in reserve, as it were.
I said that in the rush to home ownership, renting tenants of that association were being neglected. Its response was that it was true that it gives a lot of emphasis to helping tenants fulfil their home ownership aspirations, but it did not do that at the expense of those tenants who did not want, or could not yet afford, to take on the responsibilities and costs associated with home ownership. Nor did it proceed at the expense of those who were not able to secure social housing. That language has exactly the same ring as the paragraph that I quoted during last Thursday’s sitting, about the Opposition’s policy review document. I hope that I am not digressing too far—it may be more of a point of order than a contribution, but we will see.
The quotation in question came from the Conservative policy review, and I never tire of repeating it:
“Living in social housing should be viewed as a transition during which support is temporarily required before moving up the ‘ladder’ to some form of shared or outright ownership,”
That quotation, which I constantly see parroted by RSLs as well as by Conservative local authorities, was not attributed in the Official Report. In other words, there is no indication at that stage, although I am certain that I gave it, as to where that quotation came from. I know where it came from, because when the hon. Member for Welwyn Hatfield leapt to his feet, or got slowly to his feet, a column later, at column 544, in an anxiety to put some distance—some clear blue water—between his own policy review and his Front Bench, he said:
“Such a claim simply cannot go on the record.”——[Official Report, Housing and Regeneration Public Bill Committee, 24 January 2008; c. 544.]
I feel rather sad that the hon. Gentleman has been taken at his word and that has not gone on the record. I make no criticism of the Official Report,other than to make the correction in parentheses. Few people take much notice of what the hon. Gentleman says on housing policy, nor am I sure that they should. I am slightly deviating from the subject, but the point is clear. Opportunities are being taken daily now, particularly when problems arise in high-value land areas with RSLs and local authorities straying off—

Joe Benton: Order. We are moving slightly away from the clause. I ask the hon. Gentleman to come back to the debate on clause stand part.

Andrew Slaughter: The point has been made. I understand the criticisms made by the right hon. Member for North-West Hampshire, but over-limiting the criteria under subsection (2) will not deliver the purpose of the Government’s proposal.

Andrew George: I seek reassurance from the Minister with regard to subsection (2)(k) on
“environmental, social and economic well-being of the areas”
in which RSLs provide their property. I want confirmation that their contribution will be in proportion to their interests within the area. There are many circumstances in which they might have a small collection of properties that have been developed as a result of a quota on a site, which is primarily and predominantly private sector development. However, it would be inappropriate if, as a result of the standards set by the regulator, RSLs had to provide a disproportionate contribution to the environmental, social and economic well-being of the area and, thus, let off the private sector provider of the bulk of the properties. There are many times when, particularly in rural areas, the local playing field or local environmental parking arrangements and other facilities provide for the whole of the community, not only those living in the small collection of houses provided by RSLs. I would much appreciate the Minister putting it on record that the regulation would be applied proportionately.

Iain Wright: The right hon. Member for North-West Hampshire made a good point about standards and rents. I think that I am clear about such matters: the regulator will be able to set standards for the rent policy for registered providers. Under clause 177, I expect directions from the Secretary of State to apply with regard to standards in respect of registered provider rents. I have said that I will look again at the issue. The Cave report was clear that standards should be set with regard to the rent-setting regime. That is an important line in the sand.
As the right hon. Gentleman hinted during his contribution, rent-setting is important to the whole housing benefit bill and wider Government economic policy. It is right and proper that the Secretary of State has the ability to direct the regulator to set a standard with regard to registered provider rents. Initially, I expect that to operate along the same lines as the rent-influencing regime, but the right hon. Gentleman mentioned an important point about local authorities. In a sense, he hit the nail on the head as to why we cannot have the single domain regulator.
There are real practical difficulties. The right hon. Gentleman said that huge issues would need to be addressed, which is what the advisory group headed by Professor Ian Cole from Sheffield is doing at present. We are considering how regulations and standards could apply to the local authority stock, which is one of the reasons why we could not move more quickly to a single domain regulator.
The right hon. Member for North-West Hampshire asked—I think—about subsection (2)(k). I do not know whether he was here for the start of today’s sitting when I explained, in response to a point made by my right hon. Friend the Member for Greenwich and Woolwich, that compliance will be proportionate to a provider’s stock in the particular area. I do not want to labour the point, but hope that the right hon. Gentleman and my right hon. Friend are reassured.

Question put and agreed to.

Clause 173, as amended, ordered to stand part of the Bill.

Clause 174

Management

Iain Wright: I beg to move amendment No. 230, in clause 174, page 68, line 26, leave out ‘non-profit’.

Joe Benton: With this it will be convenient to discuss Government amendment No. 231

Iain Wright: The governance and viability of registered providers will be a central concern of the new regulator. A poorly run or non-viable provider will inevitably be bad for tenants and might become insolvent—something that has happened in recent weeks. That should be avoided if possible and cannot be allowed to impact on the security of tenants’ homes. Clause 174 gives the regulator the power to set standards for registered non-profit providers relating to the management of their financial and other affairs. The amendments will also permit such standards to be set for profit-making providers, but only in respect of the social housing that they own, because, for example, the regulator might need to ensure that profit-making providers make adequate financial provision to cover future repair costs of social housing.
As I have mentioned on a number of occasions—certainly this morning—during the Committee’s deliberations, we expect social housing activities to form a much smaller proportion of the overall business of registered profit-making providers than of existing RSLs. As a result, it would be disproportionate for the regulator to set standards for governance and viability for all of the affairs of a profit-making provider. Shareholders and other owners hold to account the board of a share-distributing, private company. However, to the extent that threats to governance and viability might jeopardise the necessary protections we are seeking to secure for social housing tenants, the regulator should have a more limited role in setting standards for the proper conduct of a profit-making body’s social housing business.
The hon. Member for Montgomeryshire is not here, but he raised a number of issues this morning about amendment No. 230. He asked how it relates to clause 123. The point is that good housing management might require a provider to put aside enough money for repairs, as I mentioned earlier, to which the ability to make accounting directions is relevant. The provider might need contingent liabilities on a range of things that need to be addressed, and it is necessary for accounts to show that. Financial viability standards for profit-making providers are likely to involve ensuring sufficient money or liability to make repairs a practical concern. I hope that the hon. Member for St. Ives will pass that on to the hon. Member for Montgomeryshire. This is a sensible group of amendments that will ensure that tenants of social housing are adequately protected. I hope that hon. Members will accept them.

Andrew George: I have discussed this matter with my hon. Friend the Member for Montgomeryshire, who welcomes the amendments, which are in the spirit of those to which he spoke in this morning’s sitting. I welcome the amendments. My only question to the Minister concerns the restrictions in amendment No. 231, which states:
“In respect of profit-making registered providers, standards may be made in relation to the management of their affairs only so far as relating to the provision of social housing”.
In that respect, presumably by defining social housing as that part of the stock provided by the profit-making registered provider, can a local authority have some influence on allocations to those properties? Perhaps there is another definition of what the social housing element of the profit-making provider is. I encourage the Minister to expand his definition of the extent to which regulation should apply to profit-making providers.
Surely, in some circumstances, the public sector and the taxpayer have an interest, for example when a property is occupied by a tenant who is in receipt of housing benefit, when some form of grant aid has contributed to the renovation or upkeep of a property, when public money has been spent through a disabled facilities grant to enable it to be used by someone who has a particular need, or when a property is sub-let by a local authority. The latter circumstance is common these days in areas of high housing demand stress. A private sector provider of rented accommodation could make a property available, perhaps on a short-term basis, to a local authority, so that the authority can meet its local housing obligation.
It would be helpful if the Minister explained a little more about the extent to which amendment No. 231 will apply to profit-making providers. How will the measure apply? To what extent can the measure be extended to ensure that the tenants of profit-making providers of such housing are protected by the regulations?

Iain Wright: I am not certain that I follow the hon. Gentleman’s line of questioning. He made a number of points about the definition of social housing. He should go back to the comprehensive and detailed deliberations on the definition that we heard when we debated clauses 66 to 69. From the manner in which he spoke—he can correct me if I am wrong—it seemed that he was suggesting that he tabled an amendment to introduce a similar measure, which he wanted to be a back-door way of regulating the private rented sector. My hon. Friend the Member for West Ham is nodding furiously at that. However, as I said, that is not practical at the moment.
My basic premise on for-profit providers is that it is sensible for the regulator to have assurance that they will not go bust and leave tenants high and dry. The regulator needs to ensure that the financial and governance arrangements for that particular provision of social housing are adequately addressed. I do not see that as moving any further towards the regulation of the private rented sector, but I stand to be corrected.

Andrew George: I am genuinely probing the Minister. Will he enlighten the Committee, if only for my benefit, as to the kind of stock that is provided by profit-making social housing providers and the basis on which it is provided? The remainder of that stock is not determined. I agree entirely that social housing has been debated and defined previously, but if profit-making providers provide housing other than social housing, what type of housing is it and why is it not being brought under this regulation?

Iain Wright: Again, the hon. Gentleman was not here this morning when I talked about a sort of murkiness of providers. I meant that in the best possible sense, not in a corrupt manner. I meant that previously, from 1974 onwards, social housing was provided by housing associations and market housing by private sector developments, and that we now have much more cross-fertilisation, for want of a better term. I also pointed out that private sector developments might provide money and housing that would be available on the open market, and might cross-subsidise by providing social housing in addition to grants from the Homes and Communities Agency and other such public funding. That cross-fertilisation is important. The regulator needs reassurance regarding the financial viability of that element of social housing.
My hon. Friend the Member for West Ham wanted to intervene, and I do not know whether the moment has passed. [Interruption.] The moment has passed. Given that different types of provider are coming into the social housing model and that we want more and better-quality social housing, I hope that the hon. Member for St. Ives will agree that the regulator needs to be reassured as much possible. Given the boundaries of the regulator’s objectives—particularly objective 10, on minimising interference—I hope that the hon. Gentleman is reassured that tenants will not be left high and dry if a provider goes bust.

Amendment agreed to.

Amendment made: No. 231, in clause 174, page 68, line 27, at end insert—
‘( ) In respect of profit-making registered providers, standards may be made in relation to the management of their affairs only so far as relating to the provision of social housing.’.—[Mr. Iain Wright.]

Clause 174, as amended, ordered to stand part of the Bill.

Clause 175 ordered to stand part of the Bill.

Clause 176

Consultation

Iain Wright: I beg to move amendment No. 232, in clause 176, page 68, line 38, after ‘standards’ insert
‘or issuing, revising or withdrawing a code of practice’.

Joe Benton: With this it will be convenient to discuss Government amendments Nos. 233 and 238.

Iain Wright: Government amendment No. 232 requires that consultation take place when codes of practice are issued under clause 175, and when standards are issued under clauses 173 and 174. Government amendment No. 233 requires that, along with other named bodies, the regulator must consult on standards and codes of practice—if amendment No. 232 is agreed to—with bodies appearing to it to represent the interests of secured creditors. I hope that the Committee agrees that lenders have a strong interest in standards because they wish to ensure that providers will remain a low investment risk.

George Young: I agree entirely that one should consult registered providers. Why, then, has the Minister not tabled similar amendments to clause 177(2), which contains a similar list of consultees, and to clause 193?

Iain Wright: Let me consider that more closely; the right hon. Gentleman might have got me on that.
Government amendment No. 238 amends clause 178(3), which permits the regulator to “revise or withdraw standards” following consultation. The amendment adds:
“Standards may be expressed by reference to documents prepared by others.”
The amendment explicitly recognises that other bodies or stakeholders acting as a group may propose and consult on documents that the regulator may then approve and issue—for example, a standard device by providers that has been approved by the regulator and been through the necessary consultations. That would increase their involvement in and sense of ownership of a standard. I hope that the Committee accepts the amendments and that, not withstanding the pertinent point raised by the right hon. Gentleman, we can move onwards.

Andrew George: I know that we are not debating it at present, but Government amendment No. 235, which relates to the clause, states:
“A direction may disapply the requirement to consult under section 176 in relation to specified matters.”
It would be helpful if the Minister said what type of specified matters the Government have in mind in tabling that amendment, particularly in relation to the amendments he has moved on this clause.

Joe Benton: Order. Under the circumstances, it would be more appropriate to wait until we get to that amendment.

Iain Wright: I have said all that I need to say. I am happy to address the points on Government amendment No. 235 as we move forward, and I will look at what the right hon. Member for North-West Hampshire has said.

Amendment agreed to.

Amendment made: No. 233, in clause 176, page 68, line 41, at end insert—
‘( ) one or more bodies appearing to it to represent the interests of secured creditors of registered providers,’.—[Mr. Iain Wright.]

Clause 176, as amended, ordered to stand part of the Bill.

Clause 177

Direction by Secretary of State

Iain Wright: I beg to move amendment No. 234, in clause 177, page 69, line 8, at end insert—
‘( ) In deciding whether to give a direction the Secretary of State shall, in particular, have regard to the regulator’s fundamental objectives.’.

Joe Benton: With this it will be convenient to discuss the following amendments:
No. 49, in clause 177, page 69, line 8, at end insert—
‘provided that any such directive is consistent with the regulator’s fundamental objectives as defined in section 86.’.
Government amendments Nos. 235 to 237.

Iain Wright: This is an important clause. We have been made very aware of that today, and I hope that the Committee will recognise, from the points that I have made in earlier discussions and deliberations on amendments, that I am going to look at this issue comprehensively. I hope that interested parties, stakeholders and Members will be involved in that process.
Government amendments Nos. 234 to 237 and amendment No. 49 refer to clause 177, which permits the Secretary of State to issue directions to the regulator, to set a standard or to advise on the content of standards with which the regulator must comply. It is also required that the Secretary of State consult on the directions and publish them. As I have said, I am aware of concerns and I will try to do something about them; the amendments are likely to be consistent with whatever final position I bring forward.
Government amendment No. 234 and amendment No. 49 seek to achieve the same goal—to ensure that any directions given by the Secretary of State do not conflict with the regulator’s fundamental objectives, as given at clause 86. We can all agree that that is an important control on the Government’s ability to tell the regulator what to do, and in mitigating against the risk, which we have mentioned many times in Committee, of policy passporting with regard to registered providers.
The objectives include—I have mentioned this important point time and again—requiring the regulator to minimise interference. We do not believe that the Secretary of State could compel the regulator to act outside its objectives, even without the amendments, but it is worth while addressing these concerns and making the point explicitly the Bill. The two amendments are slightly differently worded, and in my view both would probably work, although naturally I prefer Government amendment No. 234 because it recognises implicitly that the objectives need to be balanced, and that there will be trade-offs.
I again refer Members to clause 86, subsection (13) of which states:
“The order in which the objectives are listed in this section is not significant; the regulator shall balance them as it thinks appropriate.”
Government amendments Nos. 235 and 237 deal with the potential problem of double consultation; I hope that that addresses the point that was made in connection with the earlier group of amendments. The Secretary of State will consult on the issue of direction, and the regulator will have to consult on it again, under the requirement in clause 176, before issuing it as a standard. The whole Committee will be aware that that could be very slow and duplicative process. That is why we have included clause 177(5), which makes it unnecessary for the regulator to consult when it is complying with a direction. However, I have reconsidered that subsection. In some cases, the Secretary of State could issue a detailed direction—on rent policy, for example—which the regulator could then implement without the need for further consultation because it had made no substantive additions to the direction.
In most cases, we expect that a direction will be strategic, not detailed, and that the regulator would add the detail. In such cases, the regulator should be required to consult again. We think that the Secretary of State needs more discretion here. Amendment No. 237 proposes to remove clause 177(5), and in amendment No. 235 I propose adding a replacement provision that would allow the Secretary of State, by direction, to disapply the requirement in clause 176 for the regulator to consult on matters specified in that direction. That would allow the Secretary of State to decide whether additional consultation was needed on an issue on which they had directed.
Amendment No. 236 proposes to add two lines to clause 177(4), which currently requires the Secretary of State to publish each direction. The amendment ensures that the Secretary of State will publish three things: the proposed direction on which they have been consulted, all responses to the consultation, and the final direction. That is intended to improve and enhance the quality and transparency of consultation. I hope that the amendments clarify the measure and that they show the direction of travel that we want to move in. On that basis, I hope that the Committee will accept the Government amendments and reject amendment No. 49.

Nick Raynsford: My hon. Friend the Minister was kind enough to say that amendment No. 49 and Government amendment No. 234 were largely comparable in their intention and effect. I am delighted about that. He will be aware from the numbers that amendment No. 49 was tabled before Government amendment No.234, so I am delighted that the Government have taken stock on that and found a way to refine the wording, so that they can put their own alternative in place to achieve the same effect. I am delighted that good sense has been accepted, and I am very happy to support the Government amendment.

Alistair Burt: I have no wish to prolong the discussion, and I think that we will come back to this matter on Report. Is the Minister hoping that his proposals on consultation and the way in which the clause is drawn will be done by the time the matter is discussed on Report, or will it be done by the time we get to another place?
I take issue with the right hon. Member for Greenwich and Woolwich as regards the similarity of these two amendments. The amendments are similar, but they are not the same. I can have regard to something, but yet choose not to make a decision entirely in line with what I have had regard to. If I am acting consistently in relation to objectives, that is much more binding. I can perceive in some distant future when there is not as benevolent a Minister as the one in front of us now—

Iain Wright: Next week.

Alistair Burt: It will be next week, given the present rate. I sincerely hope not. The Minister would say that I am making a direction under clause 177, after having had regard to the provisions under clause 173. Nevertheless, I decided to do that. A court would hold that, providing regard had been had to the powers, that was sufficient to satisfy the amendment.
The bottom line is that there is concern that the power of direction is extensive. It is almost as far as that power in relation to the HCA, which is a public body. Issues have been raised, such as whether the power will have public sector borrowing requirement implications or whether we are moving the whole sector into the public sector because of the degree of direction and the like. We would just like to put on the record that we have a fear of that happening and, accordingly, when the provision is considered again, we are interested to make sure that the power of direction should not be as strong and that there should be no doubt about where the sector boundaries lie.

Nick Raynsford: I do not want the hon. Gentleman to think that I had been light in accepting the Government’s alternative. His interpretation of the Government’s intention is slightly pessimistic. Had the Government’s amendment said that the Secretary of State shall have regard to the regulator’s fundamental objectives, and it was assumed that the Secretary of State could then ignore items that she did not agree with, the hon. Gentleman’s concerns might be justified. However, it would be difficult for the Secretary of State, when deciding whether to give a direction, to have regard to the regulator’s fundamental objectives and then to ignore them. If that were to happen, my learned friends would have little or no hesitation in seeking judicial remedies. I put that to the hon. Gentleman.

Alistair Burt: We may be dancing on the head of a pin, but many lawyers’ fortunes have been made on just that. I am merely putting the case that I do not think that such matters are exactly the same, although I concede that they are similar. I have said that, provided we have had regard to something, we would have satisfied the test of having regard. It means that we might be able to move in a different direction. However, all will be cleared up in the future to show that my pessimism was entirely unjustified and that matters will not work that way. We have discussed the implications of the provision, and I want to put it on the record that we share some of the reservations that have been expressed. We look forward to further debate on Report.

Andrew George: As someone who put his name to the amendment tabled by the right hon. Member for Greenwich and Woolwich, I support the argument of the hon. Member for North-East Bedfordshire that, as drafted, the Government’s amendment would leave the defined position of the Secretary of State in significantly more vaguely drafted terms that would clearly increase her capacity to intervene in future. Earlier, I spoke of my worry about the wording of Government amendment No. 235 on the extent to which the Secretary of State may disapply the requirement to consult in respect of “specified matters”. It would be helpful to be told what specified matters the Minister has in mind, and in which circumstances the requirement for the Secretary of State to consult can be disapplied.
I am encouraged by the Minister’s welcoming remarks. I believe that he is attaching himself to the spirit of the amendment tabled by the right hon. Member for Greenwich and Woolwich. I am keen that we pin down the extent to which the Secretary of State will have freedom to intervene or to disapply the requirement to consult in the manner that is suggested by the amendment.

Iain Wright: We have had an interesting debate on the provisions under clauses 173 to 177. I want to move forward, but I share the view of my right hon. Friend that hon. Members have been unduly pessimistic with regards to this. I have made it clear on a number of occasions that I will look at the provisions again and bear in mind the points raised in the Cave report about raising standards according to tenant need. I do not want to be accused of misleading the Committee, so I put on the record that when I spoke today about consulting with hon. Members, stakeholders and the wider RSL sector, I did not want the Committee to think that I will be undertaking a formal consultation process with regard to directions. I will be having discussions with stakeholders, and on that basis it will be a lot quicker.
The hon. Member for North-East Bedfordshire asked a direct question about when I expect that to happen: I think that it would be incredibly remiss of me not to provide a clear line of travel on Report and I hope that that reassures him. I do not think that the concerns about secular classification and micromanagement can wait until the other place. I do not want to repeat the points I have made already with regard to the points made by the hon. Member for St. Ives, and I hope that we can move forward.

Amendment agreed to.

Amendments made: No. 235, in clause 177, page 69, line 15, at end insert—
‘( ) A direction may disapply the requirement to consult under section 176 in relation to specified matters.’.
No. 236, in clause 177, page 69, line 17, after ‘publish’ insert ‘—
( ) each proposed direction that is the subject of a consultation,
( ) each response to a consultation, and
( ) ’
No. 237, in clause 177, page 69, line 18, leave out subsection (5).—[Mr. Wright.]

Question proposed, That the clause, as amended, stand part of the Bill.

George Young: May I encourage the Minister to jump a fence that he refused to jump five minutes ago? It is in relation to clause 177(2). He eloquently persuaded the Committee to add an additional consultee to clause 176—namely those who represent the interests of secured creditors of registered providers. That is eminently sensible in that the regulator should not do anything that destabilises the financing of housing associations. The question is, if it were sensible for the regulator to consult those bodies before he did anything to the standards, why are those bodies not included in clause 177(2)? It is identical in every other respect except that it excludes the interests of secured creditors. Is the Minister planning to introduce a similar amendment to clause 177 on Report?

Iain Wright: Obviously, I have a more positive interpretation of this measure than the right hon. Gentleman. I do not think that I was sitting on the fence. I thought that I had said that I would look at the matter closely and come back on Report. I am happy to clarify the position now if that would satisfy the right hon. Gentleman.

Question put and agreed to.

Clause 177, as amended, ordered to stand part of the Bill.

Clause 178

Supplemental

Nick Raynsford: I beg to move amendment No. 50, in clause 178, page 69, line 21, leave out subsection (1) and insert—
‘(1) The regulator may exercise its powers as set out in Chapters 6 and 7 in order to secure the proper management of the affairs of a registered provider. In considering whether mismanagement or misconduct has occurred, the regulator may have regard (among other matters) to the extent to which the standards are being or have been followed.’.

Joe Benton: With this it will be convenient to discuss the following amendments: No. 347, in clause 223, page 82, line 22, leave out paragraph (a).
No. 348, in clause 225, page 83, line 34, leave out paragraph (a).

Nick Raynsford: The Committee is probably relieved that this is the last group of amendments that I shall move. It tidies up one of the remaining concerns about the specific powers of the regulator, and how the regulator will look at standards and use evidence of a failure to meet standards as a basis for intervention with a failing provider. It is important for the regulator to have this power. It is right that the regulator should intervene if a provider has not met proper standards and that has resulted in substandard management, misconduct or other unfortunate circumstances that adversely impact on tenants or possibly on public finances.
There is no question about the importance of a regulatory regime that allows intervention. There is, of course, a question as to whether the regulatory regime is proportionate, encourages good practice and avoids the worst type of tick-box mentality that simply wants people to say that they have done certain things in order to satisfy the regulator that standards have been met.
The purpose of amendment No. 50 is to specify that the regulator, in exercising his powers to secure the proper management of the affairs of a registered provider, may have regard, among other matters, to the extent to which standards have or have not been followed when deciding whether misconduct or mismanagement have occurred. That seems to be a sound basis for the regulator reaching a judgment about the need to intervene or to take action to remedy a failure without the risk of becoming unduly prescriptive on the one side or unduly tokenistic—the tick-box mentality that I already described—on the other.
The other two amendments, which are about management tenders, are designed to leave out in clauses 223 and 225 the provision that states that a section applies if
“a registered provider has failed to meet a standard”
because it simply creates as the test the fact that a standard has not been satisfied. There is the danger, as I said, that people will look solely at the extent to which the letter of the provision has been satisfied when determining whether there has been a failure. Unfortunately, it will probably lead to a more mechanistic, more tokenistic approach to regulation than I would like.
The purpose of the amendments is to delete the automatic provision for intervention if there has been a failure to meet a standard. Instead, there is a wider provision for the regulator to have regard to the failure to meet a standard in deciding whether mismanagement or misconduct have occurred; therefore, there is a need for intervention.
I am sure that my hon. Friend the Minister will say that the amendments are unduly restrictive because they retain the tests of mismanagement and misconduct that are part of the current regime. I believe that those tests are important because, ultimately, regulation should not be about simply seeing whether people satisfy a particular test and ticking the box, but seeing whether they are managing properly and effectively, and are not guilty of misconduct.
I have not tabled the amendments with any great expectation that they will be accepted, but I hope that they reinforce the case that I have made that the whole regulatory framework needs to be reviewed to ensure that we have the right balance between effectiveness on the one side and appropriateness and proportionality on the other. For the reasons that I have outlined in previous debates as well as this one, I still think that there are grounds for concern about the clauses in this section of the Bill. I look forward to further discussion in due course on amendments that my hon. Friend may wish to introduce on Report or at subsequent stages to ensure that we have the best possible regulatory framework.

Iain Wright: I am keen to meet my right hon. Friend’s expectations, which is why I shall ask him to withdraw the amendments. He is right that we are reviewing the matter, and, as I have mentioned on several occasions, we are discussing the wording of this part of the Bill with stakeholders. I hope that he will be involved in the process. As he rightly suggested, we may make amendments in due course to reflect any revision to our position.
The amendments are not strictly necessary, as the regulator’s powers under the new system in the Bill are consistent, even modelled, if I dare say that word, on modern regulatory practice. They are not substantially different from those in the existing system. However, I have made clear my intention to look at the matter again in close co-operation with my right hon. Friend, on which basis I hope that he withdraws the amendment.

Nick Raynsford: I am satisfied with my hon. Friend the Minister’s response and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 238, in clause 178, page 69, line 26, at end insert—
‘( ) Standards may be expressed by reference to documents prepared by others.’.—[Mr. Wright.]

Clause 178, as amended, ordered to stand part of the Bill.

Clause 179 ordered to stand part of the Bill.

Clause 180

Survey: supplemental

Iain Wright: I beg to move amendment No. 239, in clause 180, page 70, line 24, at end insert—
‘( ) Proceedings for an offence under this section may be brought only by or with the consent of—
(a) the regulator, or
(b) the Director of Public Prosecutions.’.
This is a technical amendment that replicates existing provision in sections 37(4) and 38(3) of the Housing Act 1996. On that basis, I shall not detain the Committee further.

Amendment agreed to.

Clause 180, as amended, ordered to stand part of the Bill.

Clause 181

Inspection

Iain Wright: I beg to move amendment No. 240, in clause 181, page 70, line 26, after ‘may’ insert ‘arrange for an inspector to’.

Joe Benton: With this it will be convenient to discuss the following: Government amendments Nos. 241 to 247.
Government new clause 41—Inspector’s powers.

Iain Wright: The amendments in this group are largely technical and consequential on the fact that the regulator need not carry out inspections itself. Government amendments Nos. 240 to 243 clarify that the regulator may appoint an inspector from his staff, as we think will happen, and, as I mentioned in an oral evidence session, from others including, for example, the Audit Commission.
Government amendments Nos. 244 and 245 are necessary to clarify that a report, which must be published by the regulator, will be prepared by the inspector rather than by the regulator itself.
Government amendments Nos. 246 and 247 add the Audit Commission, as well as anyone else whom the Secretary of State “thinks appropriate”, to the list of those who must be consulted when the Secretary of State authorises fees to be charged. I anticipate and envisage that the Audit Commission will carry out the vast majority of inspections in line with the Government’s policy of limiting the number of inspectorates and minimising bureaucracy and regulation whenever possible. I hasten to add, however, that the regulator will decide on the matter.
New clause 41 gives the inspector powers similar to those available to the Audit Commission under the Local Government Act 1999, including to require documents, to have access to premises, and to be afforded facilities in which to carry out an inspection. Those powers are no more than the Audit Commission relies on at present, so they should not present a new or additional burden on regulated parties.

Amendment agreed to.

Amendments made: No. 241, in clause 181, page 70, line 26, after ‘inspect’ insert ‘—
(a) ’.
No. 242, in clause 181, page 70, line 27, at end insert ‘, or
(b) the financial or other affairs of a registered provider.’.
No. 243, in clause 181, page 70, line 27, at end insert—
‘( ) “Inspector” means one or more members of the regulator’s staff, or other persons, authorised in writing by the regulator for the purposes of conducting the inspection.’.
No. 244, in clause 181, page 70, line 27, at end insert—
‘( ) After carrying out an inspection an inspector must produce a written report.
( ) The regulator—
(a) must give the registered provider a copy of the report, and
(b) may publish the report and related information.’.
No. 245, in clause 181, page 70, line 29, leave out subsection (3).—[Mr. Wright.]

Andrew George: I beg to move amendment No. 335, in clause 181, page 70, line 33, leave out subsections (4) to (7).
This amendment has the vocal support of my hon. Friend the Member for Montgomeryshire. Its purpose is self-evident. RSLs would not wish to heap upon themselves unnecessary costs, but owing to the way in which the clause is drafted, inspection costs could be heaped at relatively short notice. One does not know what those costs will be, and they could be generated for purely vexatious but insubstantial reasons that might none the less need to be satisfied at the expense of the RSL.
Given that some of the inspections might need to be made at relatively short notice, they cannot be budgeted for. All the arguments are self-evident. As discussed previously, the clause will place RSLs at a disadvantage compared with competitors that do not need to meet those regulations and inspection costs. For all those reasons, RSLs will need reassuring that if costs are to be applied, they will be proportionate. As drafted, however, the clause does not provide that reassurance. It is best, therefore, that we delete subsections (4) to (7) to ensure that RSLs are properly protected from unplanned expenditure that in many cases might be brought upon them in a climate of over-regulation.

Iain Wright: I disagree fundamentally with the amendment. On a point of principle, it is right that a registered provider suspected of failing to meet standards should be required to pay. The alternatives, about which we could argue, are that the costs be met by all registered providers or by the taxpayer. However, I disagree with both of those. In some cases, it might not be in the interests of the tenants for the registered provider to be charged the full costs of an inspection, which is why we envisage that the regulator’s scale of fees will provide for the size or turnover of the registered provider and other circumstances affecting the provider’s ability to afford the full fees.
The hon. Gentleman must agree that we need some controls on the power, which is why we have proposed that the Secretary of State may authorise the regulator to charge fees under clause 181(4) and that, before doing so, he must also consult with the regulator, the Audit Commission and persons representing providers, under subsection (6). Before charging fees, the regulator must prescribe a scale of fees, on which it should consult with the Secretary of State and persons representing providers, as set out in subsection (7). I am fairly convinced that the regime as set out in the Bill is appropriate and right in principle. On that basis, I hope that the hon. Gentleman will withdraw his amendment.

Andrew George: The Minister says that he disagrees fundamentally with the amendment. However, he said that the provision will apply if a housing association is “suspected” of breaching regulations and responsibilities. If there is a suspicion that it is failing to meet its regulatory requirements, standards and obligations, it might find itself the subject of perpetual and vexatious complaints and with the perpetual expectation of having to meet the bills of inspections.

Andrew Love: Taking up the point that the Minister made, if the hon. Gentleman pushes the amendment to a vote, is it not yet another example of a Liberal Democrat tax increase—and is it funded?

Andrew George: I think that I will sidestep that. There is a serious point here. If the Minister said that the charges would be applied only if a housing association were found guilty of the accusations behind the inspection, that would be reasonable. I am concerned, however, that the regulator might be perpetually inspecting a perfectly acceptable housing association that provides an excellent service but is simply under the cosh of complainants pursuing vexatious complaints against it, thereby forcing it to meet excessive costs.

Lembit Öpik: Does my hon. Friend agree that if this is a tax increase of any sort it is nothing compared with the outrageous tax increase by stealth that the Minister proposed earlier in relation to charging fees for the regulatory elements of the regulatory body’s activities?

Iain Wright: Will the hon. Gentleman give way?

Joe Benton: Order. I somehow suspect that that has nothing to do with the amendment.

Andrew George: Thank you, Mr. Benton. I wondered whether I might intervene in the debate. Given the nature of the two interventions that I have taken, it is clear that the debate is being undertaken in the context of a great deal of political froth.
It is important to seek reassurance from the Minister and the Government that inspection charges will be applied proportionately. I should think that it would be most appropriate to apply them retrospectively if a housing association were found not to have applied the regulations. If an inspection proves that a housing association is operating properly, it is quite improper that it should then have to meet the costs of the inspection.
Given the nature of the Minister’s comments, I hope that he will indicate that inspection costs will be applied proportionately. I hope also that before Report he will reflect on my points about inspection costs having a disproportionate impact on an RSL that is being over-inspected or disproportionately inspected, particularly if it is found to be meeting regulations. I am pleased that we have explored this issue and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 246, in clause 181, page 70, line 37, leave out ‘and’.
No. 247, in clause 181, page 70, line 39, at end insert—
‘( ) the Audit Commission for Local Authorities and the National Health Service in England, and
( ) such other persons as the Secretary of State thinks appropriate.’.—[Mr. Wright.]

Clause 181, as amended, ordered to stand part of the Bill.

Clause 182

Performance information

Question proposed, That the clause stand part of the Bill.

Joe Benton: With this we may take Government new clause 40—Publication of performance information

Iain Wright: New clause 40 is linked to clause 182, which allows the regulator to require registered providers to prepare an annual report assessing their performance by reference to the standards under clause 173, and then to send it to the regulator and to specify what the report should cover. That allows the regulator to get the information that it needs to monitor and enforce good housing management, supplemented by additional information collected under clause 104 or inspection reports under clause 181.
However, it is fair to say that tenants, local authorities and others also need useful information on landlord performance so that they can compare the service different landlords offer and help hold them to account. New clause 40 places a duty on the regulator to provide information at least once a year. It specifies that the information includes that likely to be useful to tenants, potential tenants and local authorities. It could include, for example, its assessment of performance, self-assessments, the outcome of inspections and tenant satisfaction data. It will help to achieve the recommendations of the Cave review. Martin Cave saw the regulator as publishing comparative information and effective local league tables for registered providers so that tenants and others could compare performance within the same local area, similar to those for schools, universities and hospitals.

Clause 182 ordered to stand part of the Bill.

Clause 183

Inquiry

Iain Wright: I beg to move amendment No. 248, in clause 183, page 71, line 17, leave out ‘in relation to social housing’.

Joe Benton: With this it will be convenient to take the following: Government amendment No. 250.
Government amendment No. 256.
Government amendment No. 299.
Government new clause 42—Inquiry: charities
Government new clause 58—Charities that have “received public assistance”

Iain Wright: The amendments and new clauses are all about the application of the regulator’s powers to inquire into the affairs of a registered provider to profit-making bodies and charities that have registered. The provisions are technical points on existing powers and, on that basis, I do not want to detain the Committee any further.

Amendment agreed to.

Iain Wright: I beg to move amendment No. 249, in clause 183, page 71, line 22, after ‘they’, insert ‘and the members of their family’.
This provision amends clause 183 further. It allows the regulator to conduct an inquiry into a provider’s affairs. The amendment is technical. It amends the definition of the phrase “independent of the regulator” under subsection (4) to include members of the families of members and employees of the regulator. An inquiry must be conducted by at least one independent person to improve and enhance transparency in that process. I hope that members of the Committee will accept the amendment.

Amendment agreed to.

Clause 183, as amended, ordered to stand part of the Bill.

Clause 184

Inquiry: supplemental

Amendment made: No. 250, in clause 184, page 71, line 28, at end insert—
‘( ) The inquirer may consider the affairs of a profit-making registered provider only so far as relating to social housing.’.—[Mr. Wright.]

Iain Wright: I beg to move amendment No. 251, in clause 184, page 71, line 33, leave out ‘publish’ and insert
‘arrange for the publication of’.
Clause 184 relates to the conduct of inquiries into a provider’s affairs. It allows the regulator to arrange for the publication of the inquirer’s report, rather than publish the report itself. This simply adds flexibility to the process. It may be, for example, that the person conducting the inquiry might also publish the report. The decision as to whether the report or part of it should be published at all will be strictly a decision for the regulator. It might decide not to publish all or parts of a report, for example, where it contains commercially sensitive information. It is a sensible amendment, and I hope that Committee members will accept it.

Amendment agreed to.

Clause 184, as amended, ordered to stand part of the Bill.

Clause 185

Inquiry: evidence

Iain Wright: I beg to move amendment No. 252, in clause 185, page 72, line 2, leave out from ‘to’ to end of line 5 and insert ‘provide specified documents or information.’.

Joe Benton: With this it will be convenient to take Government amendments Nos. 253 to 255.

Iain Wright: The amendments are technical, detailed amendments to clause 185, which allows the person conducting the inquiry to which I have referred, to gather evidence for an inquiry into a provider’s affairs. As I have said, the amendments are technical and I think that they make the clause clearer. In order to move business in a swift manner, I do not wish to detain the Committee any longer.

Amendment agreed to.

Amendments made: No. 253, in clause 185, page 72, line 6, leave out subsection (2) and insert—
‘(2) The notice may, in particular, require evidence to be given on oath (and the inquirer may administer oaths for that purpose).’.
No. 254, in clause 185, page 72, line 8, leave out ‘to persons’ and insert ‘documents’.
No. 255, in clause 185, page 72, line 11, leave out ‘(4), (5), (6) and’ and insert ‘(3) to’.—[Mr. Wright.]

Clause 185, as amended, ordered to stand part of the Bill.

Clause 186

Extraordinary audit

Amendment made: No. 256, in clause 186, page 72, line 21, at end insert—
‘( ) The revenue accounts of a registered charity may be audited under this section only insofar as they relate to its housing activities.’.—[Mr. Wright.]

Clause 186, as amended, ordered to stand part of the Bill.

Clauses 187 and 188 ordered to stand part of the Bill.

Clause 189

Charity: change of objects

Question proposed, That the clause stand part of the Bill.

Andrew George: In relation to our earlier debate following the amendments moved by the right hon. Member for Greenwich and Woolwich and in relation to clauses 172 to 174, the right hon. Gentleman suggested that in order to protect the independence of the RSLs, it is important that they can reflect it in their memoranda and articles of association, their constitution and so on. What troubles me here, and this is reflected in these clauses, is the extent to which the regulator, under both clause 188 and clause 189, must first, in the case of industrial and provident societies, have consented under clause 188(3) to any changes that the RSL wishes to make to the society’s rules. Similarly, under clause 189(3), the regulator must be consulted by the Charity Commission if someone seeks to make an amendment. To an extent, we have debated this issue before. The Minister has reassured the Committee that these bodies retain their independence, but what troubles some of us is that these two clauses suggest that their independence is not entirely maintained by the extent to which the regulator can intervene. The Charity Commission has to be consulted and the regulator has to give consent to the changes that may be proposed by housing associations that are registered as industrial and provident societies. I simply seek some reassuring statement from the Minister with regard to these two clauses.

Iain Wright: I am not certain what the hon. Gentleman is getting at. I think that we have covered this issue fairly substantially. I think that what he is saying is that he is concerned that the regulator will intervene in a disproportionate manner in regard to the activities of the registered providers. My very clear intention, which I have expressed to the Committee, is that that is precisely what we want to avoid. Modern regulatory regimes modelled on other industries suggest that we should be proportionate, have a light touch, and should minimise interference wherever possible, and that is locked into the regulator’s objectives, as set out in clause 86. I am very keen to reassure the hon. Gentleman, but the situation is as it always has been. I could look at Hansard to see whether I have missed something, but I would have thought that the parameters that I have just outlined provided that reassurance.

Question put and agreed to.

Clause 189 ordered to stand part of the Bill.

Clause 190

Companies: change of articles

Amendment made: No. 258, in clause 190, page 73, line 12, at end insert—
‘( ) The regulator may not consent to an amendment which it thinks would turn the company into a profit-making organisation.’.—[Mr. Wright.]

Clause 190, as amended, ordered to stand part of the Bill.

Clause 191

General

Question proposed, That the clause stand part of the Bill.

Joe Benton: With this we may take Government new clause 37—Information, advice etc.

Iain Wright: Clause 191 permits the regulator to give guidance to registered providers. It does not specify limitations as to the scope or content of such guidance. Unlike standards, guidance is not binding on registered providers, but providers may wish to take it into account.
We are coming on to clause 192, which states that guidance can also cover how the regulator
“intends to use powers under this Chapter and Chapter 7.”
The regulator may have regard to compliance with guidance by registered providers when exercising or contemplating the use of its powers under chapters 6 and 7. The regulator can also issue general information of use to registered providers under this heading. I think that that is an important power. However, I am also moving an amendment to introduce new clause 37.
New clause 37 will replace clause 191. The new clause will give the regulator a more comprehensive set of powers than clause 191, letting the regulator publish information, undertake research and provide guidance, advice, education or training. It is based in part on the Housing Corporation’s power in section 77 of the Housing Association Act 1985. The new clause will be better, and on that basis, I hope that we will not agree to clause 191.

Question put and negatived.

Clause 191 disagreed to.

Clauses 192 and 193 ordered to stand part of the Bill.

Clause 194

Accreditation

Iain Wright: I beg to move amendment No. 260, in clause 194, page 74, line 11, leave out from ‘may’ to end of line 13 and insert
‘refer to accreditation under this section.’.
The amendment relates to clause 19, which allows the regulator to run or approve an accreditation scheme for housing management. It will amend subsection (6) to provide that standards set under clause 173 may refer to accreditation. It is a simple, technical amendment, and on that basis, I hope that Committee members will accept it.

Amendment agreed to.

Clause 194, as amended, ordered to stand part of the Bill.

Clause 195 ordered to stand part of the Bill.

Clause 196

Grounds for giving notice

Iain Wright: I beg to move amendment No. 261, in clause 196, page 74, line 28, at end insert—
‘( ) Case 2A is where the registered provider has failed to comply with an earlier enforcement notice.’.

Joe Benton: With this it will be convenient to discuss the following: Government amendments No. 262 to 265.
Government new clause 44—Notifying HCA.

Iain Wright: Government amendments Nos. 261 to 265 and new clause 44 relate to clauses 195 to 202, which permit the regulator to issue enforcement notices to registered providers. The amendments are technical, and they will allow enforcement notices to be used if registered providers fail to comply with an earlier notice, fail to publish the fact that they have been required to pay a penalty or compensation, or fail to pay an annual fee. They will also allow the regulator to require an enforcement notice to be published by the provider to whom it was given, and a pre-enforcement notice to be combined with a pre-management-transfer warning notice, and they will require the regulator to send a copy of an enforcement notice to the HCA. The amendments are technical, and as such, I hope that the Committee will accept them.

George Young: I appreciate what the Minister has just said—they are technical amendments to the grounds for giving notice under chapter 7. However, when he drafted the amendments, I wonder whether he had before him the letter from the Housing Ombudsman Service, which proposed an additional ground for giving notice, namely “case 7”. Case 7 would be
“where a registered provider has failed to comply with a determination of an ombudsman appointed by virtue of section 120”—
currently clause 120—
“other than an award of compensation.”
That is part of a letter from the ombudsman, Dr. Mike Biles, on 23 January. He prefaced the letter by saying that he had brought those points
“to the attention of Communities and Local Government”.
I take it that the Minister’s Department was aware that the Housing Ombudsman Service wanted clause 196 amended with an additional case. However, the amendment has not been tabled, so will the Minister confirm that he received the letter, considered the argument for an additional case and rejected it, and will he share the reasons why with us?

Iain Wright: I can confirm that the Department received the letter that the right hon. Gentleman cites. It was dated 23 January, which is not too long ago.

George Young: That was the date of the letter to me, but it referred specifically to
“the following points that I have brought to the attention of Communities and Local Government”,
So, from that, I take it that the Minister was in the picture before I was.

Iain Wright: I would not count on that. Suffice it to say that the Department is fully aware of the points raised in the letter. We are considering the proposal, and we could bring something forward in subsequent stages of the Bill. I hope that that reassures the right hon. Gentleman.

Amendment agreed to.

Amendments made: No. 262, in clause 196, page 74, line 28, at end insert—
‘( ) Case 2B is where the registered provider has failed to publish information in accordance with a requirement under section 205(2A) or 217(2A).’.
No. 263, in clause 196, page 74, line 33, at end insert—
‘( ) Case 5A is where the registered provider has failed to pay an annual fee under section 113(2).’.—[Mr. Wright.]

Clause 196, as amended, ordered to stand part of the Bill.

Clause 197

Content

Amendment made: No. 264, in clause 197, page 75, line 11, at end insert—
‘( ) The action specified in an enforcement notice may include publishing the notice in a specified manner.’.—[Mr. Wright.]

Clause 197, as amended, ordered to stand part of the Bill.

Clause 198

Warning

Amendment made: No. 265, in clause 198, page 75, line 34, after ‘224’ insert ‘, 226’.—[Mr. Wright.]

Clause 198, as amended, ordered to stand part of the Bill.

Clauses 199 to 203 ordered to stand part of the Bill.

Clause 204

Grounds for imposition

Iain Wright: I beg to move amendment No. 266, in clause 204, page 77, line 2, at end insert—
‘( ) Case 4A is where the registered provider has failed to pay an annual fee under section 113(2).’.

Joe Benton: With this it will be convenient to consider the following: Government amendments Nos. 267 to 271.
Government amendments Nos. 273 and 274.
Government new clause 45—Notifying HCA (No.2)

Iain Wright: Government amendments Nos. 266 to 271, 273 and 274 and new clause 45 relate to clauses 203 to 212, which permit the regulator to penalise failures by registered providers with a financial penalty or fine. Again, and as with similar amendments, the measures are technical.
The amendments will allow penalties to be used if registered providers fail to pay an annual registration fee, require a penalty notice to specify how that must be paid, and what interest or additional penalty is payable in the event of late payment. They will allow the notice to require that the provider publishes information about the penalty. They explain details of how the penalty and interest is to be paid and enforced, appeal rights, and the consequences for prosecution of a penalty imposed for a criminal offence. They also refer to clause 206, which I shall come to later and which we propose to remove from the Bill.
The amendments remove an erroneous reference to clause 232 in the context of combining warning notices before enforcement action, and require that a copy of the penalty notice is sent to the Homes and Communities Agency. As I said, the measures are technical and I hope that hon. Members will accept them on that basis.

Alistair Burt: The Minister is right—the amendments are technical. On the other hand, they set out new powers in the Bill.
Does the Minister have any idea of the amounts that we are talking about? Bearing in mind that whatever charges are made in penalties, they will ultimately find their way back to the tenants of the providers. Presumably, they will be required to find the money to help the providers to pay the fines.
Has the Department thought through any indicative level of fines, so that we know what new costs are being added? I raise that in the context of the regulatory burden being imposed. I understand that it is assumed to be about £15 to £20 per house in the housing association sector. The Bill might add something like £10 a house, so it all adds up to a big sum at the end of the day. Are we talking about indicative fines or about housing associations and registered providers having to find substantial amounts of money?

Iain Wright: As the hon. Gentleman is aware, we will discuss penalty notices in the clause 206 stand part debate. The regulator will have the power to set the general level of penalty notices for registered providers. We propose that it should be able to require financial penalties of no more than £5,000. The point has been made, certainly on Second Reading, that what we are trying to do is almost an exercise of naming and shaming rather than financially penalising registered providers. I should not like penalties to be imposed because I hope that registered providers will give tenants a good service, but it is a means by which we can publicise it when housing services have not been what they should be. So the fines will be subject to a limit somewhere around the £5,000 mark, but we will consider that further.

Alistair Burt: The Minister has helped me there but we are talking indicative rather than penal. That is the sense that we are trying to get, bearing in mind who is going to pay ultimately.

Iain Wright: Absolutely, the hon. Gentleman has it spot on.

Amendment agreed to.

Clause 204, as amended, ordered to stand part of the Bill.

Clause 205

Imposition

Amendments made: No. 267, in clause 205, page 77, line 19, leave out ‘and’.
No. 268, in clause 205, page 77, line 19, at end insert—
‘( ) how the penalty must be paid.’.
No. 269, in clause 205, page 77, line 20, at end insert ‘, and
( ) any interest or additional penalty which, by virtue of section 211(2), is payable in the event of late payment.’.
No. 270, in clause 205, page 77, line 20, at end insert—
‘(2A) The notice may require the registered provider to publish information about the penalty in a specified manner.’.
No. 271, in clause 205, page 77, line 20, at end insert—
‘( ) The notice must explain the effect of sections 211(1), (3) and (6) and 212.’.—[Mr. Wright.]

Clause 205, as amended, ordered to stand part of the Bill.

Clause 206

Impact

Question proposed, That the clause stand part of the Bill.

Iain Wright: As I have mentioned, I propose that the clause should not stand part of the Bill. It is one of a group of clauses on the penalty notices that we have just been discussing. It specifies that
“when the regulator is considering whether to require a registered provider to pay a penalty”
it must consider
“the likely impact of the penalty on the registered provider’s ability to provide services.”
We have just discussed fines of £5,000, and the Government take the view that that figure is somewhat excessive, and that there should be a name-and-shame approach. On that basis, I am about to introduce new clause 46, which will insert an identical clause into the part of the Bill dealing with compensation to tenants, which, unlike fines, is not limited to a total of £5,000 and could, therefore, have an adverse impact on the organisation, if the impact was not fully considered—something that we wish to avoid. On that basis, I hope that the clause does not stand part of the Bill.

Question put and negatived.

Clause 206 disagreed to.

Clause 207

Amount

Amendment made: No. 273, in clause 207, page 78, line 2, leave out subsection (1).—[Mr. Wright.]

Question proposed, That the clause, as amended, stand part of the Bill.

Nick Raynsford: We have already had a brief debate on the matter before us, but clause 207 deals with the amount of a penalty charge. I have a number of points to raise with the Minister about the thinking behind the clause. First, in subsection (2), a clear link is made between the amount of a penalty in case 5—in which a registered provider has given an undertaking and failed to comply with it—and the maximum amount of fine that a magistrates court could impose for the relevant offence. That linkage does not apply in any of the other cases.
We have been told that the figure of £5,000 stated in subsection (3) might be subject to reconsideration, because the Government are anxious that it should not jeopardise a provider’s viability. However, for many of the larger providers, £5,000 will not present a serious risk to their viability, and would probably have very little impact on their thinking. I suppose that my second point, therefore, is about the concept of proportionality in fines relating to the size and capacity of the organisation and to its ability to deliver services. The degree of the offence that has merited the fine does not appear to be set out in the Bill. Will guidance be given to the regulator on introducing the concept of proportionality?
Thirdly, the Minister mentioned compensation to tenants as a further option, in the light of which he withdrew clause 206, which required the regulator to consider the impact of a penalty on a provider’s ability to provide services or on its financial viability. That, of course, raises questions about the extent to which compensation to tenants should be an overriding entitlement, owing to the landlord’s failure to provide services that he ought to, and about whether such a penalty will be considered in proportion to its possible impact on the viability of an organisation and its ability to deliver services. There is probably quite a lot of uncertainty, and scope for some pretty messy decisions, if greater thought is not given to how the regime will operate. I would welcome the Minister’s thoughts on that, not necessarily today, but certainly before the Bill completes its passage in this House.

Iain Wright: I appreciate my right hon. Friend’s last point about providing an outline of where I think that this needs to go. He was extremely kind and gracious on that.
I shall expand on points that I made earlier in discussion with the hon. Member for North-East Bedfordshire. The setting of penalties requires a careful balance. It is quite right that £5,000 could be a very low-level fine for some large housing associations, but for others it could represent a significant financial penalty. In any case, the aim of the fine is explicitly not to bankrupt the provider, or to inhibit in any way the provider’s social housing activities. I see it as a way publicly to rebuke the provider for minor problems, and to prevent those problems from getting worse. There are a range of powers at the regulator’s disposal should the breaches get worse, to the point at which it could intervene much more directly. However, I think the question of balance is important.
I come back to one of my favourite parts of the Bill, clause 86, and objective 10 regarding proportionality, which my right hon. Friend mentioned. Proportionality is important both for objectives and for penalties, and the regulator will have to have regard to that. On that basis, I will take up my right hon. Friend’s invitation to write and express my thoughts more clearly. I hope, however, that I have reassured him.

Clause 207, as amended, ordered to stand part of the Bill.

Clause 208

Warning

Amendment made: No. 274, in clause 208, page 78, line 32, leave out ‘, 228 and 232.’ and insert ‘and 228.’.—[Mr. Wright.]

Clause 208, as amended, ordered to stand part of the Bill.

Clauses209 to 213 ordered to stand part of the Bill.

Clause 214

Grounds for award

Question proposed, That the clause stand part of the Bill.

Joe Benton: With this it will be convenient to take Government amendments Nos. 275 to 281.
Government new clause 46—Impact.

Iain Wright: This group of amendments and new clause 46 relate to clauses 213 to 222, which permit the regulator to require registered providers to compensate tenants for the provider’s failures. The amendments are technical. They require the regulator to take account of the provider’s financial standing and the effect on services when issuing compensation notices, a point that we have just touched on. They require the compensation notice to specify what interest or additional compensation is payable in the event of a late payment. They allow the notice to require that the provider publish information on the compensation; they require the notice to explain how payment of the compensation and any interest on it are to be enforced, and to explain appeal rights. They require the regulator to consult the ombudsman before issuing a pre-compensation notice—that is, a warning notice—to avoid dual compensation for the same failing. They also require the regulator to say whether a voluntary undertaking could be accepted in place of a compensation notice, as per other powers.

Margaret Moran: I share some of the concerns that my right hon. Friend the Member for Greenwich and Woolwich raised earlier regarding these issues. In relation to this group of amendments, one concern could be the length of time it might take for a victim of poor performance by an RSL to receive their compensation. Will the Minister also clarify under what circumstances the regulator would accept a voluntary undertaking rather than compensation? Obviously, that would impact on whether the tenant’s just demands were granted, with regard to the kinds of offences that the regulatory body had identified the RSL as having failed to deal with.

Iain Wright: I do not want to sidestep the issue, but it will be up to the regulator to decide how to enforce compensation notices. My hon. Friend raises an important point about the length of time involved, and I shall certainly reconsider it.
As for voluntary undertakings, I point out to my hon. Friend that, as the clauses and amendments on enforcement notices and penalty powers suggest, the regulator will be required to state in a notice whether it will consider a voluntary undertaking. In many cases it might not, but that is for the regulator to decide. I shall be frank with my hon. Friend: it was an oversight that that provision was not also included in the compensation power. I suggest to her that voluntary undertakings could encourage a provider to resolve its problem in its own way without the need for top-down intervention. That would be a good thing and might help the regulator to ensure that tenants’ concerns are addressed. I hope that she is reassured by that.

Question put and agreed to.

Clause 214 ordered to stand part of the Bill.

Clause 215 ordered to stand part of the Bill.

Clause 216

Social housing ombudsman compensation

Question proposed, That the clause stand part of the Bill.

George Young: The clause deals with the housing ombudsman, and it is good to see that the arrangements have been plumbed into the Bill. The letter that I referred to a few moments ago, which I would like to quote but cannot because it is with the Official Report, raised the specific matter of the title, “social housing ombudsman”. There were two points. First, the official designation is “housing ombudsman”; the Housing Act 1996 calls it that. Secondly, on a related point, the housing ombudsman service extends outside social housing and has a certain competence in the private rented sector. Whether or not the Minister has seen the letter, I am confident that it is somewhere in his Department. If there is substance in those points, will he consider amending the title of the clause on Report to delete the word “social”?

Iain Wright: Yes, I am aware of the issue, and it is my intention to amend accordingly.

Question put and agreed to.

Clause 216 ordered to stand part of the Bill.

Clause 217

Imposition

Amendments made: No. 275, in clause 217, page 80, line 39, leave out ‘and’.
No. 276, in clause 217, page 81, line 1, at end insert ‘, and
( ) any interest or additional compensation which, by virtue of section 220(2), is payable in the event of late payment.’.
No. 277, in clause 217, page 81, line 1, at end insert—
‘(2A) The notice may require the registered provider to publish information about the compensation award in a specified manner.’.
No. 278, in clause 217, page 81, line 1, at end insert—
‘( ) The notice must explain the effect of sections 220(1) and (3) and 221.’.—[Mr. Wright.]

Clause 217, as amended, ordered to stand part of the Bill.

Clause 218

Warning

Amendments made: No. 279, in clause 218, page 81, line 17, at end insert—
‘( ) Before giving a pre-compensation warning the regulator must consult the person appointed by virtue of section 120 as the ombudsman for the scheme of which the registered provider is a member.’.
No. 280, in clause 218, page 81, line 23, at end insert—
‘( ) A pre-compensation warning must—
(a) refer to section 121 (voluntary undertaking), and
(b) indicate whether or to what extent the regulator would accept a voluntary undertaking instead of, or in mitigation of, awarding compensation.’.
No. 281, in clause 218, page 81, line 25, after ‘224’ insert ‘, 226’.—[Mr. Wright.]

Clause 218, as amended, ordered to stand part of the Bill.

Clauses 219 to 222 ordered to stand part of the Bill.

Clause 223

Management tender

Iain Wright: I beg to move amendment No. 282, in clause 223, page 82, line 36, leave out second ‘the’ and insert ‘a’.

Joe Benton: With this it will be convenient to discuss Government amendments Nos. 283 and 284.

Iain Wright: Clause 223 gives the regulator the power to require a registered provider to put out to tender some or all of the management functions of the provider related to social housing. Clause 224 is supplemental, stating that the regulator must give notice before requiring the tender of management functions, specifying the grounds on which action might be taken, warning that the regulator is considering action and explaining the effects.
Government amendment No. 282 clarifies that a selection panel, organised by the registered provider concerned, may be constituted each time—I stress “each”—that the regulator imposes a clause 223 management tender on a provider, rather than there being one selection panel to select the management organisation whenever the regulator imposes a clause management tender on a provider.
Government amendment No. 283 adds notices under clause 226 to the list of pre-enforcement warning notices with which the clause 224 notice can be combined, on management transfer following an inquiry. The amendment ensures consistency between different provisions of the Bill that refer to different combinations of warning notices.
Government amendment No. 284 is minor. The regulator already has to send to the Homes and Communities Agency a warning notice under clause 223(2), but under the amendment it must send a copy of its final decision to impose a requirement under that subsection. That is a sensible requirement, as the agency remains informed for its own purposes of the state of play in respect of the registered provider, which may be an applicant for financial assistance.
I hope that I have made matters clear, and I hope that the Committee will accept the amendments.

Amendment agreed to.

Clause 223, as amended, ordered to stand part of the Bill.

Clause 224

Section 223: supplemental

Amendments made: No. 283, in clause 224, page 83, line 22, after ‘218’ insert ‘, 226’.
No. 284, in clause 224, page 83, line 28, at end insert—
‘( ) If the regulator imposes a requirement it must send a copy to the HCA.’.—[Mr. Wright.]

Clause 224, as amended, ordered to stand part of the Bill.

Clause 225 ordered to stand part of the Bill.

Clause 226

Section 225: supplemental

Iain Wright: I beg to move amendment No. 285, in clause 226, page 84, line 32, leave out ‘, 228 and 232.’ and insert ‘and 228.’.

Joe Benton: With this it will be convenient to discuss Government amendments Nos. 286 and 287.

Iain Wright: The amendments are minor and technical. I understand that the Committee has had notice of what they will do.

Amendment agreed to.

Amendments made: No. 286, in clause 226, page 84, line 32, at end insert—
‘( ) In imposing a requirement the regulator must have regard to views of—
(a) relevant tenants,
(b) the registered provider,
(c) the HCA, and
(d) if the regulator thinks it appropriate, any relevant local housing authority.’.
No. 287, in clause 226, page 84, line 32, at end insert—
‘( ) If the regulator imposes a requirement it must send a copy to the HCA.’.—[Mr. Wright.]

Clause 226, as amended, ordered to stand part of the Bill.

Clause 227

Appointment of manager

Iain Wright: I beg to move amendment No. 288, in clause 227, page 84, line 42, after ‘appoint’ insert ‘an individual as’.

Joe Benton: With this it will be convenient to discuss Government amendments Nos. 289 to 291.

Iain Wright: Amendments Nos. 288 to 291 are again technical and minor. Amendments Nos. 288 and 289 clarify the power in clause 227 that relates to strengthening a registered provider by the appointment of an individual special manager rather than an organisation providing management services. If the regulator wanted the provider to appoint an organisation to manage social housing, it could require a tender under clause 223, or transfer to another provider under clause 225. Where a special manager is appointed under clause 227, clause 228 requires a pre-enforcement warning notice to be served.
Amendment No. 290 enables that notice to be combined with other pre-enforcement action warning notices. It ensures consistency between different provisions in the Bill, each of which refers to combinations of warning notices. Amendment No. 291 keeps the HCA aware of the position on enforcement at a registered provider. It requires the regulator to notify the agency of the regulator’s appointment of a special manager under clause 227(2)(a), or its requirement under clause 227(2)(b) that such a manager be appointed by the registered provider. I hope that hon. Members will accept the amendments.

Amendment agreed to.

Amendment made: No. 289, in clause 227, page 84, line 43, after ‘appoint’ insert ‘an individual as’.—[Mr. Wright.]

Clause 227, as amended, ordered to stand part of the Bill.

Clause 228

Section 227: supplemental

Amendments made: No. 290, in clause 228, page 85, line 34, leave out ‘, 226 and 232.’ and insert ‘and 226.’.
No. 291, in clause 228, page 85, line 34, at end insert—
‘( ) The regulator must notify the HCA of an appointment or requirement under section 227(2).’.—[Mr. Wright.]

Clause 228, as amended, ordered to stand part of the Bill.

Clause 229

Transfer of land

Iain Wright: I beg to move amendment No. 292, in clause 229, page 86, line 3, leave out ‘used for social housing’.
This is another technical amendment that permits the regulator to transfer the land of a non-profit registered provider. This is an existing power used only in the most serious cases following an inquiry. The amendment makes it clear that, if the regulator transfers land on the basis that it would be better managed by someone else, it must take into account not only whether the social housing will be better managed but, if land other than social housing is being transferred, whether that land would be better managed too. It seeks to make the land transfer power effective by allowing for the transfer of all the land and therefore the business of the failing provider. I hope that hon. Members will accept the amendment.

Amendment agreed to.

Clause 229, as amended, ordered to stand part of the Bill.

Clause 230 ordered to stand part of the Bill.

Clause 231

Removal of officers

Question proposed, That the clause stand part of the Bill.

Nick Raynsford: This clause relates to the removal of officers. It gives power to the regulator, in certain circumstances, to get rid of the directors, trustees or committee members of not-for-profit organisations. My question relates to the fact that the vast majority of the cases under which the regulator has a power to act are to do with technical matters where the person is either bankrupt or has been disqualified under the Companies Act, or is incapable because of mental disorder from performing his functions. Subsection (9) provides the seventh case, which applies to a
“person who is impeding the proper management of the registered provider”
—it goes on to say—
“by reason of absence or failure to act”.
There have been cases of people who, for a variety of reasons, have seriously mismanaged housing associations. There was a strong case for their removal but that was not because of absence or failure to act. It was because of their malpractice. I am surprised that, unless I am misreading the provisions, there does not appear to be any power to enable the regulator to remove someone who has been capricious and incompetent or who has been acting in a way that has squandered the resources of the organisation. In earlier discussions, I referred to the affairs of the Ujima housing association, where it appears that there is quite strong evidence that there was mismanagement by senior members of that association. That mismanagement contributed to the financial difficulties that ultimately led to the association having to be transferred into the ownership of another one. This is not some theoretical case but a real-life circumstance and a situation where there could well be a need for judicious action on the part of the regulator to safeguard an association whose long-term health and viability is being put at risk by the misbehaviour of one or more members of its board or committee.
I have two questions. First, why is case 7 written in such restricted terms as to apply only to people who are judged to have impeded
“the proper management of the provider by reason of absence or failure to act”?
Secondly, what powers does the regulator have to deal with other directors or committee members who are guilty of mismanagement?

Iain Wright: I appreciate what my right hon. Friend is saying. However, I point out strongly to him that this power is an existing power of the Housing Corporation, under the terms of the Housing Act 1996. As he will understand, this power is only used when it is clearly necessary to protect the assets and the tenants. I go back to my old friend, objective 10 in clause 86, which is designed to ensure that this power is used in a “proportionate” manner. Also, the regulator will be able to remove officers during the inquiry stage. Hopefully in a moment, we will introduce new clauses 47 and 48, under the terms of which the removal of officers can happen when the affairs of an association have been mismanaged. We are improving the system as it currently stands, but the bulk of the system—the main foundation of it—is in the 1996 Act. I hope that that provides some reassurance.

Nick Raynsford: I cannot say that I am entirely reassured. In earlier exchanges, my hon. Friend rightly highlighted the fact that we are dealing with different circumstances from those that applied with the Housing Corporation. He has justified the changes that have been made elsewhere on the ground that the new regulator requires greater powers because it does not have the direct sanction of withdrawing grant, which is currently available to the Housing Corporation. I am sceptical of the argument that this power is simply a carry-forward of the powers available to the Housing Corporation. Secondly, if it is the case that someone’s activities are seriously jeopardising the viability of a housing association, surely it is better for the regulator to be able to act swiftly rather than having to go through a protracted inquiry, by the end of which it may be impossible to safeguard the continued viability of that organisation.
If we are creating new provisions that are appropriate to the new circumstances and to the new regulator, we ought to take account of circumstances that are wider than the very limited ones that are provided for under case 7. Will my hon. Friend give further thought to this issue——not today, because clearly we have to make progress, but before the Bill completes its passage through this House?

Iain Wright: I have a lot of respect for what my right hon. Friend says, and will look at this issue again. However, as I have said before, under the current regulatory regime, the Housing Corporation has powers to intervene when there are serious problems with a regulated body. The lenders have insisted on that, quite rightly, largely in regard to mismanagement or misconduct. I suggest that these powers are mainly appropriate in only the most extreme cases. The new regulatory regime will try to solve housing management problems at a much earlier stage. It will intervene earlier and maybe not in such extreme circumstances.
I am sad that the hon. Member for North-East Bedfordshire is not here, but he is muddled on the modern regulatory regime. Intervening earlier will help to stop systemic problems with services to tenants.
My right hon. Friend will, I think, agree with me that the sector should be compliant with recent developments in improving regulations. For example, the Macrory report suggested a number of intermediate intervention steps, which we are proposing, while at the same time making sure that the existing powers are there, as I said before. However, I hope that the regulator would not have to intervene at such a late stage.

Question put and agreed to.

Clause 231 ordered to stand part of the Bill.

Clause 232

Section 231: supplemental

Iain Wright: I beg to move amendment No. 293, in clause 232, page 87, line 10, leave out subsection (2).

Joe Benton: With this it will be convenient to discuss Government amendment No. 294

Iain Wright: Clauses 231 and 232 concern the removal of officers of registered providers for grounds such as insolvency. Government amendment No. 293 removes reference to a removed officer’s right to appeal to the High Court, because that will now be in new clause 50, which we will discuss later. Amendment No. 294 simplifies the wording of the restriction on that power for charities, the details of which are now in new clause 58, which we discussed with clause 183. I do not want to detain the Committee any longer.

Amendment agreed to.

Amendment made: No. 294, in clause 232, page 87, line 11, leave out from ‘only if’ to end of line 38 and insert ‘the charity has received public assistance.’.—[Mr. Wright.]

Clause 232, as amended, ordered to stand part of the Bill.

Clause 233

Appointment of new officers

George Young: I beg to move amendment No. 100, in clause 233, page 88, line 3, after ‘constitution’, insert
‘provided that the total number of appointees under this section does not exceed one-fourth of the total number of officers, or four persons, whichever is greater’.
This is the other side of the coin of the debate that we have just had. When the regulator removes officers from the board of a housing association, clause 233 deals with his powers to appoint new officers. My amendment seeks to constrain that power, to avoid the regulator, by stealth, effectively taking over the running of a housing association. There is concern in the National Housing Federation that, particularly given subsection (1)(c), the regulator could go on appointing new officers to the housing association until he had, in effect, taken over the provider by appointing a controlling majority to the board. The amendment seeks to prevent that by restricting the number of officers that the regulator can appoint. Clearly, if the regulator has lost confidence in the board as a whole and wants to replace a lot of them, he would use other powers in the Bill and not clause 233, so I am not sure that the amendment is constraining the regulator from intervening if there are causes for concern, but it would allay an anxiety on the part of some of the housing associations if the power of the regulator was capped, as indicated in amendment No. 100.

Iain Wright: I quite like the amendment. I have a lot of sympathy with its motivations. However, on reflection, it would be difficult to implement while protecting powers that the regulator will need in the most exceptional and difficult cases. In the vast majority of cases, even serious ones, it would not be appropriate for the regulator to make large-scale board appointments. Indeed, as the right hon. Gentleman will know, the Housing Corporation usually appoints only three persons under its existing power, which it states is enough to provide the necessary mix of skills and expertise.
Having said that, there will be circumstances in which it might be necessary for the regulator to appoint more than three board members to safeguard public investment and the interests of tenants. The Housing Corporation has been obliged to use the power on four occasions when a board has resigned en masse. It is important that the regulator has the powers needed to intervene in such extreme or rare situations without having powers that might be considered excessive in other situations. Although I cannot accept the amendment, I am happy to consider whether it is possible to limit the regulator’s powers to appoint a majority of board members to specific circumstances. The resignation of a board en masse is an obvious example, but there might be other circumstances that we should and could provide for, such as the immediate threat to the viability of the provider.

Andrew George: The Minister mentioned boards resigning en masse. However, would the housing association in question not also be registered with an industrial and provident society or the Charity Commission and would other provisions not come into play to deal with potential dissolution? If a board resigns in such circumstances, would it not be more appropriate for that regulatory authority and those rules to apply, rather than for the regulator to appoint members to the board, particularly if it has a majority stake on the board?

Iain Wright: I understand the hon. Gentleman’s point. I have mentioned the four occasions where that has happened before. We are trying to avoid a vacuum in governance. In exceptional circumstances, it might be necessary for the new regulator to have that power. As I have said, I am keen to work with the right hon. Member for North-West Hampshire in order to find a way forward. On that basis, I hope that he will withdraw the amendment.

George Young: As I have discovered over the past few weeks, the Opposition are in a very weak negotiating position. The Minister has made a generous offer, which I am happy to accept. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 233 ordered to stand part of the Bill.

Clauses 234 to 237 ordered to stand part of the Bill.

Clause 238

General

Iain Wright: I beg to move amendment No. 295, in clause 238, page 90, line 32, at end insert—
‘“rent” includes payments under a licence to occupy accommodation,’.

Joe Benton: With this it will be convenient to discuss Government amendment No. 300

Iain Wright: Amendment No. 295 is a technical amendment and clarifies the definition of “rent” to include money received under a licence to occupy. That will ensure that accommodation made available under a licence can still be classed as low-cost rental accommodation, given the reference to rent in clause 68. Amendment No. 300 merely adds that definition—I am disappointed that the right hon. Member for North-West Hampshire has left because I am going to mention the word “list”—to the list of definitions in clause 239. Notwithstanding my disappointment, I hope that hon. Members will accept the amendments.

Amendment agreed to.

Clause 238, as amended, ordered to stand part of the Bill.

Clause 239

Index of defined terms

Iain Wright: I beg to move amendment No. 296, in clause 239, page 91, line 14, at end insert—
‘Equity percentage arrangements
Section 69(5)’.

Joe Benton: With this it will be convenient to discuss Government amendments Nos. 297, 298 and 301.

Iain Wright: I shall not take up too much of the Committee’s time. This group of amendments is minor and technical, and simply add definitions made elsewhere in the Bill to the list—that word again—of definitions in clause 239.

Amendment agreed to.

Amendments made: No. 297, in clause 239, page 91, line 29, at end insert—
‘Pre-compensation warning
Section 218’.
No. 298, in clause 239, page 91, line 30, at end insert—
‘Pre-penalty warning
Section 208’.
No. 299, in clause 239, page 92, line 2, at end insert—
‘Received public assistance (charities)
Section (charities that have “received public assistance”)’.
No. 300, in clause 239, page 92, line 8, at end insert—
‘Rent
Section 238’.
No. 301, in clause 239, page 92, line 10, at end insert—
‘Shared ownership arrangements
Section 69(4)
Shared ownership trust
Section 69(6)’.
—[Mr. Wright.]

Clause 239, as amended, ordered to stand part of the Bill.

Clause 240 ordered to stand part of the Bill.

Clause 241

Transitional

Amendment made: No. 302, in clause 241, page 92, line 27, leave out ‘(initially)’.—[Mr. Wright.]

Clause 241, as amended, ordered to stand part of the Bill.

New Clause 34

Transfer schemes
‘(1) The Secretary of State may make one or more schemes for the transfer of the Housing Corporation’s property, rights or liabilities to—
(a) the regulator,
(b) the HCA, or
(c) the Secretary of State.
(2) On the transfer date, the designated property, rights or liabilities are transferred and vest in accordance with the scheme.
(3) Schedule 6 applies to a scheme under this section.
(4) In this section—
“designated”, in relation to a scheme, means specified in or determined in accordance with the scheme;
“the transfer date” means the date specified by a scheme as the date on which the scheme is to have effect.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 35

Interim arrangements
‘The Secretary of State may by notice require the Housing Corporation to provide staff, premises, facilities or other assistance to—
(a) the regulator, or
(b) the HCA.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 36

Seal
‘(1) The application of the regulator’s seal shall be authenticated by a member or by some other person authorised (generally or specially) for that purpose.
(2) A document purporting to be duly executed under the seal—
(a) shall be received in evidence, and
(b) shall be treated as so executed unless the contrary is shown.’.—[Mr. Wright.]

Brought up, and read the First time.

Iain Wright: I beg to move, That the clause be read a Second time.
The purpose of new clause 36 is to make it clear that the application of the regulator’s seal to a document may be carried out by any member of the board of the regulator, or by anyone else authorised to do so. That will enable the regulator’s staff to seal documents, of which the most important will be disposal consents. It is a standard provision that enables people doing business with the regulator to rely on a sealed document without having to obtain evidence that it was properly executed.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 37

Information, advice &c.
‘(1) The regulator may for the purpose of advancing its fundamental objectives—
(a) publish ideas or information;
(b) undertake research in relation to social housing;
(c) provide guidance, advice, education or training.
(2) The regulator may for that purpose—
(a) arrange for another person to do anything within subsection (1)(a) to (c);
(b) act jointly with, cooperate with or assist another person doing anything within subsection (1)(a) to (c).
(3) The persons to whom advice may be given under subsection (1) include—
(a) unregistered housing associations (as defined by section 2B of the Housing Associations Act 1985 (c. 69)), and
(b) persons who may be forming a housing association (within the meaning of section 1(1) of that Act).’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 38

Consent to disposals under other legislation
‘The Secretary of State’s functions under the following provisions are transferred to the regulator in so far as they relate to disposals by registered providers—
(a) section 171D of the Housing Act 1985 (c. 68) (consent to certain disposals of housing subject to the preserved right to buy), and
(b) section 81 and 133 of the Housing Act 1988 (c. 50) (consent to certain disposals of housing obtained from housing action trusts or local authorities).’.—[Mr. Wright.]

Brought up, and read the First time.

Iain Wright: I beg to move, That the clause be read a Second time.

Joe Benton: With this it will be convenient to discuss the following:
Government new clause 39—Section (consent to disposals under other legislation): consequential amendments.
Government amendment No. 303
Government amendment No. 305

Iain Wright: As the Committee is well aware, we are establishing a new social housing regulator whose key objective will be the protection of tenants of registered providers. Part of the protection that we currently provide to such tenants comes in the requirement that their landlord must seek consent before they can dispose of their homes. In most cases, a registered social landlord requires the consent of the Housing Corporation for disposals of land, but with certain homes, the Secretary of State’s consent is required instead. Section 171D of the Housing Act 1985 requires the Secretary of State’s consent if the tenant has the preserved right to buy, which applies generally to homes that were previously owned and let by local authorities. Sections 81 and 133 of the Housing Act 1988 require the Secretary of State’s consent for the first disposal of a home acquired respectively from a housing action trust or local authority. The local authority would have required the Secretary of State’s consent for the initial disposal under the 1985 Act, section 133 of which requires consent for a subsequent disposal.
It is entirely right and consistent that registered providers should seek such consent from the new regulator in future. New clauses 38 and 39 put that into effect. The clauses provide that consent must be sought first from the new social housing regulator, if consent is sought by a registered provider for disposal of a home in England; secondly, from the Secretary of State if consent is sought by any other landlord for disposal of a home in England; and, thirdly, from Welsh Ministers if consent is sought for disposal of any home in Wales, whoever proposes to dispose of it.
New clause 39 repeals subsection (6) of sections 81 and 133 of the 1988 Act, which require the Secretary of State to consult the Housing Corporation before consenting to a disposal of land by a registered social landlord. As the Committee is aware, the Bill will abolish the Housing Corporation and Oftenant, the regulator, will take over its disposal consent functions. That requirement is therefore obsolete.
Amendments Nos. 303 and 305 are consequential on new clause 39. They add references to the repeal provisions to the schedule of repeals. I hope that that has made things clear.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 39

Section (consent to disposals under other legislation): consequential amendments
‘(1) In section 171D of the Housing Act 1985 (consent to certain disposals of housing obtained subject to the preserved right to buy)—
(a) in subsection (2) (consent) for “Secretary of State” substitute “appropriate authority”, and
(b) after that subsection insert—
“(2A) “The appropriate authority” means—
(a) in relation to a disposal of land in England by a registered provider of social housing, the Regulator of Social Housing,
(b) in relation to any other disposal of land in England, the Secretary of State, and
(c) in relation to a disposal of land in Wales, the Welsh Ministers.”
(2) In section 81 of the Housing Act 1988 (consent to certain disposals of housing obtained from housing action trusts)—
(a) in subsection (3) (consent) for “Secretary of State” substitute “appropriate authority”,
(b) after that subsection insert—
“(3A) In this section “the appropriate authority” means—
(a) in relation to a disposal of land in England by a registered provider of social housing, the Regulator of Social Housing,
(b) in relation to any other disposal of land in England, the Secretary of State, and
(c) in relation to a disposal of land in Wales, the Welsh Ministers.”,
(c) in subsection (5) (consultation of tenants) for “Secretary of State” substitute “appropriate authority”,
(d) in subsection (5)(a) for “himself” substitute “itself”, and
(e) omit subsection (6) (consultation of Housing Corporation).
(3) In section 133 of that Act (consent to certain disposals of housing obtained from local authorities)—
(a) in subsection (1) (consent) for “Secretary of State” substitute “appropriate authority”,
(b) after that subsection insert—
“(1ZA) In this section “the appropriate authority” means—
(a) in relation to a disposal of land in England by a registered provider of social housing, the Regulator of Social Housing,
(b) in relation to any other disposal of land in England, the Secretary of State, and
(c) in relation to a disposal of land in Wales, the Welsh Ministers.”,
(c) in subsection (3)(c) (modification of certain provisions applied for the purposes of section 133) after “this section,” insert “any reference to the appropriate national body shall be construed as a reference to the appropriate authority and”,
(d) in subsection (5) (consultation of tenants) for “Secretary of State” substitute “appropriate authority”,
(e) in subsection (5)(a) for “himself” substitute “itself”, and
(f) omit subsection (6) (consultation of Housing Corporation).’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 40

Publication of performance information
‘(1) The regulator shall publish, at least once a year, information about the performance of registered providers.
(2) In particular, the regulator shall include information likely to be useful to—
(a) tenants,
(b) potential tenants, and
(c) local authorities.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 41

Inspector’s powers
‘(1) An inspector appointed under section 181 may by notice require a person to provide specified documents or information.
(2) The power under subsection (1) may be exercised only in relation to documents and information of a kind in respect of which the regulator can impose a requirement under section 104.
(3) Sections 104(3) to (7) and 105 apply for the purposes of subsection (1) (with any necessary modifications).
(4) An inspector may at any reasonable time—
(a) enter premises occupied by the registered provider which is being inspected, and
(b) inspect, copy or take away documents found there.
(5) An inspector may require any person on the premises to provide such facilities or assistance as the inspector reasonably requests.
(6) It is an offence for a person without reasonable excuse to obstruct an inspector exercising the powers conferred by subsection (4) or (5).
(7) A person guilty of an offence is liable on summary conviction to a fine not exceeding level 3 on the standard scale.
(8) Proceedings for an offence may be brought only by or with the consent of—
(a) the regulator, or
(b) the Director of Public Prosecutions.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 42

Inquiry: charities
‘(1) An inquiry may be held in relation to a registered charity only if it has received public assistance.
(2) An inquiry in relation to a registered charity may only relate to its activities relating to housing.
(3) If an inquiry is held in relation to a registered charity the regulator shall notify the Charity Commission.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 43

Use of proceeds
‘(1) Sums in a registered provider’s disposal proceeds fund may be used or allocated only in accordance with a direction by the regulator.
(2) If at the end of a period specified by the regulator the disposal proceeds fund includes sums which have not been allocated in accordance with subsection (1), the regulator may require the registered provider to pay the sums to the HCA.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 44

Notifying HCA
‘If the regulator gives an enforcement notice it must send a copy to the HCA.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 45

Notifying HCA (No.2)
‘If the regulator imposes a penalty it must send a copy of the penalty notice to the HCA.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 46

Impact
‘(1) This section applies when the regulator is considering—
(a) whether to award compensation, or
(b) the amount of compensation to award.
(2) The regulator must take account of any information available to it about the financial situation of the registered provider.
(3) The regulator must consider the likely impact of the compensation on the registered provider’s ability to provide services.
(4) In particular, the regulator must aim to avoid—
(a) jeopardising the financial viability of the registered provider,
(b) preventing the registered provider from honouring financial commitments, or
(c) preventing the registered provider from taking action to remedy the matters on the grounds of which the compensation might be awarded.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 47

Suspension during inquiry
‘(1) The regulator may make an order under this section if—
(a) an inquiry under section 183 is in progress in respect of a non-profit registered provider, and
(b) either of the following cases applies.
(2) Case 1 applies if the regulator has reasonable grounds for believing—
(a) that the registered provider has failed to meet a standard under section 173 or 174 or that its affairs have been mismanaged, and
(b) that the interests of tenants of the registered provider, or its assets, require protection.
(3) Case 2 applies if as a result of an inquirer’s interim report under section 184 the regulator is satisfied—
(a) that the registered provider has failed to meet a standard under section 173 or 174, or
(b) that its affairs have been mismanaged.
(4) The regulator may by order suspend any officer, employee or agent of the registered provider who it thinks has contributed to the failure or mismanagement.
(5) The regulator may suspend an officer, employee or agent of a registered charity only if the charity has received public assistance.
(6) An order ceases to have effect at the end of the period of 6 months beginning with the day on which the inquirer’s final report under section 184 is made.
(7) But the regulator may revoke an order before the end of that period.
(8) The regulator shall notify the Charity Commission if it suspends an officer, employee or agent of a registered charity.’.—[Mr. Wright.]

Brought up, and read the First time.

Iain Wright: I beg to move, That the clause be read a Second time.

Joe Benton: With this it will be convenient to discuss the following: Government new clause 48—Removal or suspension following inquiry.
Government new clause 49—Suspension under section (suspension during inquiry) or (removal or suspension following inquiry): supplemental.
Government new clause 50—Appeal against removal or suspension.
Government new clause 51—Disqualification of removed person.
Government new clause 52—Register of disqualified persons.
Government new clause 53—Acting while disqualified: offence.
Government new clause 54—Acting while disqualified: other consequences.
Government new clause 55—Restrictions on dealings during inquiry.
Government new clause 56—Restrictions on dealings following inquiry.
Government new clause 57—Restrictions on dealings: supplemental.

Iain Wright: New clauses 47 to 57 all supplement the regulator’s powers to hold an inquiry, which are dealt with in clauses 183 to 186. The powers are existing powers from paragraphs 23 to 26 and paragraph 28 of schedule 1 to the Housing Act 1996, which we need to keep in the Bill. They are largely unchanged except that they can be used where a standard has been breached. On that basis, I commend them to the Committee.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 48

Removal or suspension following inquiry
‘(1) This section applies if as a result of an inquiry under section 183 or an audit under section 186 the regulator is satisfied—
(a) that a non-profit registered provider has failed to meet a standard under section 173 or 174, or
(b) that the affairs of a non-profit registered provider have been mismanaged.
(2) The regulator may by order remove any officer, employee or agent of the registered provider who it thinks has contributed to the failure or mismanagement.
(3) Pending a decision whether to remove an officer, employee or agent, the regulator may by order suspend the person for a specified period of up to 6 months.
(4) The regulator may remove or suspend an officer, employee or agent of a registered charity only if the charity has received public assistance.
(5) Before making an order the regulator must take all reasonable steps to give at least 14 days’ notice to—
(a) the person, and
(b) the registered provider.
(6) The regulator shall notify the Charity Commission if it removes or suspends an officer, employee or agent of a registered charity.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 49

Suspension under section (suspension during inquiry) or (removal or suspension following inquiry): supplemental
‘(1) This section applies where the regulator suspends an officer, employee or agent of a registered provider under section (suspension during inquiry) or (removal or suspension following inquiry).
(2) The regulator may give directions to the registered provider about—
(a) the performance of the suspended person’s functions, and
(b) any other matter arising from the suspension.
(3) The regulator may appoint a person to perform the suspended person’s functions.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 50

Appeal against removal or suspension
‘A person removed or suspended under section 231, (suspension during inquiry) or (removal or suspension following inquiry) may appeal to the High Court.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 51

Disqualification of removed person
‘(1) A person is disqualified from acting as an officer of a registered provider if the person has been removed under—
(a) section (removal or suspension following inquiry), or
(b) paragraph 24(2)(a) of Schedule 1 to the Housing Act 1996 (c. 52), section 30(1)(a) of the Housing Associations Act 1985 (c. 69) or section 20(1)(a) of the Housing Act 1974 (c. 44) (other similar provisions).
(2) The regulator may waive a disqualification either generally or in relation to a particular registered provider or class of registered providers.
(3) A waiver may be granted only on an application by the disqualified person.
(4) The regulator shall notify a person whose disqualification is waived.
(5) If a disqualified person acts as an officer of a registered provider, the person’s acts are not invalid by reason only of the disqualification.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 52

Register of disqualified persons
‘(1) The regulator shall maintain a register of persons disqualified under section (disqualification of removed person).
(2) The register must show details of any waivers.
(3) The regulator shall make the register available for inspection by the public.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 53

Acting while disqualified: offence
‘(1) It is an offence for a person to act as an officer of a registered provider in respect of which the person is disqualified under section (disqualification of removed person).
(2) A person guilty of an offence is liable—
(a) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum or both;
(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both.
(3) Proceedings for an offence may be brought only by or with the consent of—
(a) the regulator, or
(b) the Director of Public Prosecutions.
(4) In relation to an offence committed before the commencement of section 282 of the Criminal Justice Act 2003 (c. 44) (short sentences) the reference in subsection (2)(a) to 12 months shall have effect as if it were a reference to 6 months.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 54

Acting while disqualified: other consequences
‘(1) This section applies where the regulator is satisfied that a person—
(a) has acted as an officer of a registered provider in respect of which the person is disqualified under section (disqualification of removed person), and
(b) in doing so, has received payments or other benefits from the registered provider.
(2) The regulator may require the person to repay the sum or, as the case may be, a specified amount representing the whole or part of the value of the benefit.
(3) If a person fails to comply with a requirement the registered provider may recover the sum or specified amount as a debt.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 55

Restrictions on dealings during inquiry
‘(1) The regulator may make an order under this section if—
(a) an inquiry under section 183 is in progress in respect of a non-profit registered provider, and
(b) either of the following cases applies.
(2) Case 1 applies if the regulator has reasonable grounds for believing—
(a) that the registered provider has failed to meet a standard under section 173 or 174 or that its affairs have been mismanaged, and
(b) that the interests of tenants of the registered provider, or its assets, require protection.
(3) Case 2 applies if as a result of an inquirer’s interim report under section 184 the regulator is satisfied—
(a) that the registered provider has failed to meet a standard under section 173 or 174, or
(b) that its affairs have been mismanaged.
(4) The regulator may order a bank or other person who holds money or securities on behalf of the registered provider not to part with the money or securities without the regulator’s consent.
(5) The regulator may make an order restricting—
(a) the transactions that may be entered into by the registered provider, or
(b) the nature and amounts of payments that may be made by it.
(6) An order under subsection (5) may in particular provide that transactions may not be entered into or payments made without the regulator’s consent.
(7) The regulator may make an order in respect of a registered provider that is a registered charity only if it has received public assistance.
(8) An order ceases to have effect at the end of the period of 6 months beginning with the day on which the inquirer’s final report under section 184 is made.
(9) But the regulator—
(a) may revoke the order before that time;
(b) may by order extend it for a specified period of up to 6 months.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 56

Restrictions on dealings following inquiry
‘(1) This section applies if as a result of an inquiry under section 183 or an audit under section 186 the regulator is satisfied that—
(a) a non-profit registered provider has failed to meet a standard under section 173 or 174, or
(b) the affairs of a non-profit registered provider have been mismanaged.
(2) The regulator may order a bank or other person who holds money or securities on behalf of the registered provider not to part with the money or securities without the regulator’s consent.
(3) The regulator may make an order restricting—
(a) the transactions that may be entered into by the registered provider, or
(b) the nature and amounts of payments that may be made by it.
(4) An order under subsection (3) may in particular provide that transactions may not be entered into or payments made without the regulator’s consent.
(5) The regulator may make an order in respect of a registered provider that is a registered charity only if it has received public assistance.
(6) An order under this section has effect until revoked by the regulator.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 57

Restrictions on dealings: supplemental
‘(1) Before making an order under section (restrictions on dealings during inquiry) or (restrictions on dealings following inquiry) the regulator must take all reasonable steps to give notice to—
(a) the registered provider, and
(b) in the case of a order under section (restrictions on dealings during inquiry)(4) or (restrictions on dealings following inquiry)(2), the person to whom the order is directed.
(2) Contravention of an order under section (restrictions on dealings during inquiry)(4) or (restrictions on dealings following inquiry)(2) is an offence.
(3) A person guilty of an offence is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(4) Proceedings for an offence may be brought only by or with the consent of—
(a) the regulator, or
(b) the Director of Public Prosecutions.’.—[Mr. Wright.]

Brought up, read the First and Second time, and added to the Bill.

Alistair Burt: On a point of order, Mr. Benton. I shall not be here on Thursday, so before we reach the conclusion of the Bill I wish to thank you and Mr. Gale for your chairmanship. I know that my hon. Friend the Member for Welwyn Hatfield will continue things on Thursday. I appreciate the work of the Minister, the Whip on duty and such able colleagues who have handled the Bill. As I shall not be speaking from the Front Bench for a little while, I hoped that you would not mind my saying thank you, Mr. Benton.

Iain Wright: Further to that point of order, Mr. Benton. May I just put on record that I think I speak for the Labour Benches when I say what a pleasure it has been to work with the hon. Member for North-East Bedfordshire. He is a true gentleman of the finest order, and, as I have said, his contribution to the Conservatives’ communities and local government team has been a pleasure to see. It will be diminished as a result of his absence. I shall miss him, not just because he makes me look tall but because he is a real talent in the House and raises its average.
Further consideration adjourned.—[Liz Blackman.]

Adjourned accordingly at eleven minutes past Seven o’clock till Thursday 31 January at Nine o’clock.